OUTSOURCING is one of the most important issues in the modern management practice. It is one of the key strategic choices about what an organisation will do itself and get others to do for them. According to some current research, organisations are increasingly outsourcing their operations where core competence does not exist. Peters and Waterman in their searches for excellence found that organisations with excellent rating concentrate on their core areas; they are doing what they are good atstick to the knittingdo only what you can do better. In other words, organisations only produce that product which they can produce best. There are also some other reasons for which organisations go for outsourcing some of their non-core operations. For instance: Better uses of the existing resources and focusing on the core business activities, rather than performing the activities for which it does not have the specialised resources and time to supervise.
Cost reduction is one of the key influencing factors for outsourcing the non core activities. Risks are shared between the organisation and outsourcing service provider.
Capital resources are freed up and these can be utilised in the core business area.
In Bangladesh, the major steps of outsourcing is the outsourcing of accounting and finance-related services. However the culture of outsourcing of support activities is increasing, for instance, the security services are mostly outsourced by most of the organisations. Most of the foreign missions, multinational companies and foreign diplomats are now outsourcing other supporting activities as well.
If we consider the value chain model we will see that the activities of an organisation can be divided in two main categories: Primary activities; inbound logistics; operations; outbound logistics; marketing and sales; after sales services; support activities; firm infrastructure; human resources; technology development; and, procurement
Organisations can easily outsource some of their supporting and primary activities to improve efficiency and control their cost. They can outsource their payroll functions, debt collections, recruitment functions and other management services from the specialist firms or organisations.
In Europe and America, most of the medium and small organisations rely on the specialist outsource service provider for recruitment and specialist management service. It is not like that they can not have the facility so that they can develop an in-house system. Now it is the time for specialists and professionals; organisation's attitude is that it is the job of a professional so let them do in a professional way.
In Bangladesh, the professional accounting and audit firms are providing some basic outsourcing service to the national and multinational organisations. In case of the national organisations, these services are mainly restricted to the area of audit and taxation. There are very few organisations which outsource other services like accounting, payroll financial planning, strategic planning, management consultancy, HR management and recruitment. But all of these are specialist areas and these functions can outsource from the existing professional accountancy and audit firms.
These professional firms have huge experiences and expertise in different sectors. Due to audit service, these firms have in-depth knowledge of different business operations in all sectors. Partners and principals of these firms are qualified enough to provide management and consultancy services on various issues and they have the knowledge of modern management practices and recent developments in this area. Since continuing professional development is a precondition for their membership, they usually go for professional training on the recent developments in modern practices and different accounting and audit standards.
So these professional firms are capable of providing consultancy services on different financial and managerial issues. To develop a culture to utilise our own manpower and expertise the business organisations as well as the different professional bodies need to come forward. Business organisations should act by outsourcing from our own country, our experts and at the same time our professionals must show them and let them know that we have such experts and we can provide consultancy services not only on financial but also on the various managerial issues as well.
As a developing country, a big chunk of what we receive as donation or loan we spend by outsourcing foreign consultants. So we are losing in two ways: first we are losing financially by outsourcing foreign consultants. Our professionals, on the other hand, are not getting scope to utilise their expertise and they will lose their capability due to lack of experience. In this respect the management of multinational and foreign companies can take a big step by outsourcing from our own professionals. Management committee of these organisations should try to influence their parent organisations for such outsourcing by outsourcing from our own professionals. As a result we will be able to keep our financial resources within our own country and these outsourcing endeavours will be more cost effective. However, our professional needs to remember that they have to assure them that they are capable and have the required expertise in the respective fields. They have to offer them such financial and managerial services.
The professional firms have to prove to the various organisations that they are capable of offering not only the audit and taxation services, but also in the areas of financial planning, budget preparation, managerial services, technological development, IT, HR management, recruitment and other management consultancy services.
The writer is Deputy Manager, Qasem & Co., an associate firm of Pricewaterhouse Coopers or PWC