A lot of companies have outsourced product development services for a while now. Most of these companies look to the Far East — China, in particular — for higher product volume at significantly lower costs.
Although the topic of outsourcing is subject to controversy, mainly because those who oppose it argue about the loss of domestic jobs, it has proven to be beneficial in a lot of ways. However, as beneficial as it may be, outsourcing is not for everyone. Here are some things to know about outsourcing that should make you think if it’s for you or not.
Ask yourself why you want to outsource.
The most common answer to this is to cut costs. If that is your mindset coming into this, then you are setting yourself up for failure. While the largest driver for outsourcing is the significant reduction and control of operational costs, there are several other reasons why companies are looking into this.
Outsourcing allows them to improve the company’s focus on the business’ core aspects. It also gives them greater access to world-class talents and capabilities. It also lets them improve their efficiency and productivity when they outsource non-core activities. Asking yourself the “why” will help you determine the “who,” “what,” and “how.”
Outsourcing will cost you at first.
If you want to save money for later, you have to pay for it today. This is one of the most overlooked aspects of outsourcing. Most businessmen tend to think that outsourcing will not immediately cut their costs.
The opposite is true. Outsourcing costs money. The sooner you understand this, the fewer the headaches you will encounter.
Changes need to be made.
Expect to not just see but also implement changes in the way you run things. It will entail a different set of resources and skillsets. You and your people will have to undergo training specifically for outsourcing.
Outsourcing to China will inevitably require different methods of communication and software. There’s also the part about having an entirely different set of operational documents and legal contracts.
Clarity in communication is vital.
Although the language barrier has grown significantly lower over the past few years, working with Chinese brokers and suppliers will still require you to go the extra mile communication-wise.
If you are lucky enough to work with someone who speaks your language well enough, it lessens the chances of miscommunication. However, there are still certain aspects of working with them that you need to carefully give thought and adapt to. Contracts, for example, need to be drawn specifically for China. There are certain templates you may be used to working with that simply won’t cut it overseas because of cultural differences and language nuances.
Outsourcing is both a strategic and tactical decision.
Give careful thought to this if you are considering outsourcing to China. Oftentimes, a well-defined and implemented strategy is crucial to any project’s success.
Do your homework. Identify and analyze your needs. Consider the variables and options available to you. Weigh the pros and cons of outsourcing and take a look at the risks and opportunities in an objective light. Sell your vision and get everyone involved in the process. Plan for the long-term and draw contingencies just in case things don’t go according to plans. Make sure all bases are covered before you proceed, and when you do, proceed with caution.
Keep in mind that when you are outsourcing, you are putting your business’ success and your people’s welfare at the hands of your overseas supplier. If done right, it will reap amazing rewards for everyone involved.