Outsourcing allows a company to shift the completion of business activities from an internal operation to an external company. Companies will use outsourcing if they cannot complete a business function as well or as cheaply as another company. Most companies will attempt to outsource non-essential business tasks, saving the crucial business activities for their own employees. Prior to engaging in a full outsourcing agreement, companies will typically prepare proposals and shop these around to find the best outsourcing partner available.

Define the task to outsource. Each task or activity will need copious amounts of information so bidding companies can accurately provide information on cost and functions.

Forecast the expected volume of activity. Outsourcing companies may charge per volume for activities such as shipping, answering phone calls or processing orders, which require forecasts.

Calculate lead times. Outsourcing can add time to completing regular business functions. Companies must determine how much lead is necessary for outsourcers to process activities.

Plan for seasonal adjustments. While outsourcers may be able to handle current volume, their ability to increase labor or facility functions for holidays is also an important process in the proposal.

Set performance metrics in the proposal. Companies must a have a way to control outsourcers. Developing a schedule for performance reviews—such as customer satisfaction or the number of errors in the system—can help limit or prohibit future errors.

Create corrective measures for dealing with problems. Regardless of how well a company will operate, issues and problems will exist. Stating a list of expectations for corrective measures in the proposal will help outsourcers understand the importance of issues to the company.

Tip

Companies looking to outsource business functions should look for companies that combine as many services as possible. For example, a fulfillment company will often handle electronic orders and customer service departments and will pick, pack and ship orders. This can result in lower outsourcing costs based on volume.

Warning

Outsourcing can create negative perceptions among consumers. Individuals may find contacting the company difficult, as they must constantly deal with the outsourcer who may give less than satisfactory service.