This is the question that all outsourcing investors would like to answer: what do they really save when they invest in outsourced talent.

We all know that outsourcing has now gone beyond focusing solely on cost savings. Given that, it has to be measured by more than the monetary savings. Other things we need to look at include the new system and process improvements that came out of the arrangement. Basically, anything that made the quality of the business increase because of the outsourced investment is worth measuring.

It is important to note the benefits of outsourcing in order to gauge what savings will be incurred when you do outsource a business function or project. Here are the top 3 benefits that you should know about:

1. Better Results - given the expertise of the service provider, you will be guaranteed to get better output than could be achieved in-house. Since their business depends on the service they are giving, they are bound to invest in better infrastructure, processes and systems that will not only give great output for the function but also enhance their expertise further.

2. Business Growth - by relieving the company of certain non-core functions, they can now concentrate their resources on things  that should be their focus. That way, all the functions are being handled by experts and a holistic growth is allowed to happen..

3. Equal Opportunities - since functions are being handled by experts, businesses are given equal opportunities. The limited resources of small business owners will no longer be a hindrance in producing top quality output. In many cases, they will be at par with the way multimillion dollar companies are being run.

If all three are evident in your outsourced function, then you can say that your investment was a success.

When you think about the savings you incur with outsourcing, it has to be done carefully and at the right time. Proper analysis means an understanding of how the service provider and this new arrangement will bring forth your expected ROI. Given that, you need to also know what risks  outsourcing will bring to your company. Here are the risks that you should be wary of to maximize your savings.

1. High Saving Expectations - some companies focus so much on the monetary savings that they cannot accept the gradual increase of the ROI. Because of this, they pull the plug on the project without allowing it to grow any further. It will only lead to lost investments because it was not given the chance to progress. Outsourcing will allow you to generate savings but this will not be evident in the first few months or possibly even in the first year. However, as the outsourced function settles with the service provider and the expertise grows, the savings are guaranteed to increase over time.

2. Security and Trust Issues - these issues can be difficult to overcome, nevertheless, clients and service providers have found that  they can be by building a mutually beneficial partnership. Understand that the growth of the clients business leads to the growth of the service provider as well.  Aim to build a partnership and not just a buyer/seller relationship and both of you will eventually  overcome the security and trust issues.

3. Quality of Service - this issue can be settled when you do a background check on the service provider. Past and current clients will help you paint a picture of just how successful your relationship with this service provider can be.

4. Loss of Control - though you turn over major portions of the function to the service provider, you need to maintain absolute control of the whole project. The small details can be their responsibility but the strategic decisions and changes must come from you. Although this is important, you still have to respect the expertise of the provider in developing the function outsourced to them. Learn to listen and see if their suggestions are aligned with your company’s outsourcing objectives.

By keeping a well-rounded opinion of outsourcing, you will be able to identify the real savings you are getting from your partnership with your Outsourcing service provider.

For the complete details, read our White Paper on “What You Really Save When You Invest in Outsourced Talent”.