Tips to reducing outsourcing costs
Before you read this, click in the upper right-hand corner of this page to view this story in our digital reader. Trust us, it's way cooler!
The days of ridiculously low overseas wages are coming to an end. Developing nations like India and China are dealing with rapidly rising inflation, as workers demand higher wages. No longer can companies wave a magic wand, say the word “outsource,” and see a difference on the bottom line.
THE BENEFITS OF OUTSOURCING
Saving money when outsourcing has been a challenge. Without farther ado, here are Supply Chain Digital’s top tips to lowering outsourcing costs.
DON’T EXTEND YOURSELF
Choosing an outsourcing location based solely on what you’ll have to pay offshore workers is a bad idea, especially if that location is halfway around the globe. Nobody wants a 9,000 mile supply chain.
Instead, it’s sometimes better to look closer to home when outsourcing. Finding a skilled labor base that’s time zone friendly to your corporate headquarters can drive down costs associated with training.
TAKE ADVANTAGE OF TECHNOLOGY
Communication tools have come a long way over the past decade. Instead of hiring someone to train your new offshore workforce, consider using meeting tools such as Skype, Microsoft Office Live Meeting or other video conferencing technologies.
Webinars are also a great tool when trying to cut down on outsourcing expenses. According to Sonataservices.com, “using online tutorials or webinars can speed up the transition cycle and address a possible skills gap with offshore resources.”
That way, you can have someone in-house train and communicate your team from your corporate headquarters, where you can keep a watchful eye over the situation.
FIND A POPULATION WHOSE SKILLS FIT YOUR NEEDS
Certain countries have certain competitive advantages when it comes to outsourcing in a particular field. For example, Vietnam’s Ho Chi Minh City is an excellent choice to outsource application development and maintenance, while Buenos Aires Argentina’s population has a highly literate IT population.
Choosing the perfect location with a workforce whose skills suit your company’s needs can cut down on costs associated with the hiring and training process, keeping your business in the black.
TAKE IT SLOW
Only hire part of the offshore team during the transition phase, when you’re still figuring out exactly how you want the outsourcing process to work. While the obvious savings can be seen by having fewer workers, training costs for your offshore team will also decrease with fewer workers.
Once your operation is up and running, the more experienced members of your outsourcing team can take the reins on training the new-hires, further driving down expenses.
According to Sonataservices.com, outsourcing just the core of your offshore team in the beginning can save between 4 and 5 percent in the total transition costs.
THE MORE, THE MERRIER
Consider moving part of your core team to the outsourcing location. These team members can use their knowledge to help train the offshore hires, and can act as the bridge between the corporate and outsourcing teams.
Moving part of your team offshore can also help costs associated with employee wages, where you can scale back outsourced team members wages but keep them competitive with cost-of-living expenses in the new area.
TALK TO YOUR VENDORS
If you’re able to map out an offshore outsourcing plan that drives down product costs, some of your vendors and suppliers may be able and willing to take on some of the costs your incur from your company’s outsourcing expenditure.
Consider this a long-haul approach, and only talk to your most trusted and necessary partners when presenting such a topic. According to Sonataservices.com, “some vendors that are keen on getting the project might be willing to absorb the entire transition expense.”
Make sure to take advantage of business strategies to cut down on outsourcing expenses. Labor costs can be greatly reduced by continuous improvement strategies in design and manufacturing outsourcing.
Accenture Acquires SCM Software Firm Blue Horseshoe
Accenture has announced its acquisition of Blue Horseshoe, a US-based supply chain management software provider and consultancy firm.
Upon completion, Blue Horseshoe’s 349 professionals will join Accenture’s Supply Chain & Operations group, expanding the professional services group’s capabilities to create more interconnected and resilient supply chains for clients.
“To be competitive, companies need to transform their supply chains to deliver the innovative and hyper-personalised products, services and experiences that are in high demand—and fulfilment is core to that transformation,” said Renato Scaff, Accenture’s Supply Chain & Operations North America lead. “Blue Horseshoe’s deep fulfilment consulting experience and methodologies support Accenture’s vision for building customer-centric, resilient and responsible supply chains that benefit people, society and the planet.”
Who are Blue Horseshoe?
- Founded: 2001
- CEO: Chris Cason
- Employees: 349
- Offices: 4 in USA, 1 in Amsterdam, 1 in Estonia
- Key customers: Lids, Pabst Brewing Co., Half Price Books, Britax, Major Brands
Founded in 2001 in Indiana, USA, Blue Horseshoe now operates from six offices across the US and Europe. The company provides cloud-based solutions for supply chain management, ERP, warehouse management and transportation management systems, including its own Supply Chain Cloud platform, as well as Oracle NetSuite and Microsoft Dynamics 365 Supply Chain Management as a Microsoft Inner Circle Partner.
Blue Horseshoe specialises in fulfilment and distribution solutions, with expertise in the food and beverage, consumer packaged goods, and retail distribution industries. Over the past 20 years, the company has improved around 700 supply chains, including those of leading companies such as fashion retailer Lids, cosmetics company Regis Corporation, Pabst Brewing Co., and family-owned bookstore chain Half Price Books.
“For two decades, we’ve worked with clients to build connectedness, efficiency and automation across their enterprise and supply chain operations,” said Chris Cason, CEO, Blue Horseshoe. “As part of Accenture, we will bring increased scale and combined expertise to help clients put in place next generation supply chain and fulfillment strategies that meet customer expectations and support business growth.”
Accenture's acquisition of Blue Horseshoe is subject to customary closing conditions.