Outsourcing Models What is Right for Your Business

1. Outsourcing Models: What is Right for Your Business? In today's global economy, outsourcing has become as popular and common in business as online shopping -- it is just a matter of getting what you need at the most affordable price. For small-to-medium enterprises (SMEs) and other businesses that want to "go global" without actually leaving home, outsourcing may be the answer to the challenge of running a cost- effective enterprise while pursuing international markets. Simply put, outsourcing pertains to conducting various business processes outside of your company -- for example payroll services (like an outsourced HR department), accounting/bookkeeping services or even IT support services. It could entail just one process like bookkeeping or all processes like HR or tech support. In this article, we’re going to talk about the different Outsourcing Models that can help you determine which outsourcing service fits your business. What is the right outsourcing model for your business? As outsourcing continues to be a hot topic for businesses in the Philippines, many are looking for ways to save on cost and gain access to more flexibility. The first step is figuring out which of the three main outsourcing models will work with your business. Here's a brief overview:

2. Payroll Outsourcing Your Manila vendor manages its own office, staff and equipment as an outsourced extension of your company. You pay them directly for each employee hired but you don't have to add their wages to your payroll. The advantage of this model is that it comes with full benefits - health insurance, workers' compensation insurance and Social Security taxes are all paid by your company (as long as they're Americans). You benefit from lower payroll taxes because you don't have to pay a percentage of your employees' salaries to Social Security and Medicare. And there will be no direct charge for overtime as long as the employee is within their normal hours plus 40. Cost-center Outsourcing This outsourcing model allows you to handle the payroll yourself but outsources non-core functions like order entry, accounting and customer service. It's cheaper than Payroll Outsourcing because the vendor is not responsible for Social Security and Medicare payments.

3. However, if you're looking to get a fresh start on your costs, then it might not be as attractive since changing vendors won't make much of a difference (since they will continue to do their jobs as usual). Functionality Outsourcing This outsourcing model involves choosing a vendor that can provide all of your functions at an affordable price and that has the expertise to perform them effectively. You handle payroll using your own staff or outside payroll service providers. But everything else - such as order entry, customer service, accounting, etc. - is handled by the one main vendor you choose. The advantage of this model is flexibility in terms of hiring and firing without worrying about how they will be paid and having to train your vendor's staff in the process. The disadvantage is that you're paying for everything, even if it's not working. The most important thing when choosing a vendor is getting references from their former clients. Find out what work they've been doing and whether or not they were successful at it. How to choose an outsourcing company Before choosing an outsourcing provider or making changes to your current contract make sure you've researched your options. Make sure that you choose a provider with whom you feel comfortable in all areas, from the quality of service to cost savings and vendor stability. The benefits of working with an outsourced agency Working with an outsourcing agency is a great way to outsource your business operations. The only problem that you may encounter if you decide to work with an outsourcing agency is all the different outsourcing models that you can choose from. It sometimes becomes hard for outsourcing companies and their clients to determine which one would suit them best. Below are some of the advantages of working with an outsourced agency, whether it is offshore or nearshore.