What is Outsourcing in general?
Outsourcing combines the terms outside, resource and using and means the use of external resources or sources. The term defines a corporate strategy that outsources individual tasks, subareas or even entire business processes to third parties.
This strategy is based on the idea that productive units should focus on the activities that have a greater advantage for them. The activities which have no advantage for them, but are necessary for the execution of production processes should be outsourced.
- Cost savings
Outsourcing to Mexico allows work to be done at lower cost and sometimes with better quality service providers. Circumstances such as idle times are the responsibility of the service provider and do not burden your own company.
- Concentration on the core business
Outsourcing frees the day-to-day business of trivial matters. This makes it possible to concentrate all available resources and energies on the core business.
- Access to expertise
There is no longer any need to invest in recruiting and training expensive professionals to cover areas that are not core to the business.
- Dependence on the service provider
You have to expect deficiencies in quality, failure to meet deadlines or IT outages at the service provider.
- Communication problems
- Risk of sensitive data
If departments are outsourced, they run the risk of passing on sensitive data to third parties.
Outsourcing to Mexico
Outsourcing is an efficient management tool that facilitates the administration of a company’s tasks which has become more and more popular in Mexico. This results in tremendous advantages for foreign operating businesses as it offers them not only the possibility to perform more specific processes and activities, but also significant cost reductions and access to expertise.
Traditionally, outsourcing to Mexico was seen as a strategy only accessible to big companies, however the accelerating pace in which technology advances nowadays has made it possible for small and medium sized businesses to make use of the powerful tool and its positive impact on productivity and growth.
Outsourcing of human resources
When it comes to outsourcing of personnel in Mexico it is important to note a corresponding change in the law in 2012, which states certain conditions under which hiring employees through a service company is possible:
- Not all employees can be outsourced.
- The position must require a specialized activity.
- Outsourced employees may not do the same work as internal employees.
Business Process Outsourcing
BPO describes the externalization of business processes. In contrast to common outsourcing which focuses on supportive processes, BPO means outsourcing primary value chains. BPO has two main characteristics:
- The BPO service providers oriented towards strategic goals of their customer.
- Services are customized and good business relationships are a priority (“one-to-one approach”).
There are several reasons in favor of BPO, for example:
- Focus on core activities
- Save costs
- Increase quality
- Access to specialized knowledge
- External innovation impulses
- Transfer of business risks to a BPO service provider
Even though there is a possibility of saving money, sometimes BPO is not worth it because of:
- Dependence on outsourcing partners
- Loss of control due to shifting of business processes to external parties
- 50% of IT projects fail
- Project selection, project management and project monitoring are ineffective
In general, standardized processes which are the same or at least very similar in every company qualify well for outsourcing.
How to outsource successfully
In order to outsource successfully, a company should know/have:
- The market and its costs and quality
- Expertise in negotiation in order to determine requirements, evaluations and elaboration of proposals
- Good judgement about the provider’s quality
Especially in a foreign country BPO often represents an easy way to comply with local norms and legislation without expensive training.
Contact us about outsourcing to Mexico!
We serve our clients, who represent different industries, with over 100 employees at our offices in Queretaro, Mexico City, Puebla, Monterrey, Stuttgart (Germany), Greenville (S.C., USA) and Shanghai (China).
WMP Mexico Advisors
Pabellón Santa Fe
Anillo Vial Junípero Serra 2601 Office 201
Residencial Juriquilla Santa Fe
76230 Querétaro, Querétaro Mexiko
T: +52 (442) 209 6870