Outsourcing is an innovative method which allows Russian companies to cut down costs and increase their efficiency

Key words:outsourcer, provider, outsourcing field.

Nowadays outsourcing occurs in the Russian practice quite often. Outsourcing is a transfer of the certain functions to another company or a specific process of activity. This allows companies to concentrate on the basic and major functions of enterprises. This in turn helps to adapt to new technologies, improve the reliability, marketing reputation of the company and significantly reduce production costs. Experts believe that the proper organization of the work of the employees provides qualitative execution of functions of the outsourcer.

Currently, outsourcing is a very fashionable trend among large companies. For example, the companies and banks which/that want to avoid having specialists whose work has become inefficient and financially unprofitable. More profitable decision is to transfer functions of such employees to another company. These solutions were one of the first attempts to use outsourcing.

The company has to negotiate with another company — a partner — if it wants to increase its competitiveness. This is the basic idea of outsourcing. As per contract, the partner takes all obligations of the other company.

Outsourcing as an administrative and economic phenomenon

As it was already mentioned above, outsourcing is a method used by the company management in order to reduce the costs. It is necessary for increasing its efficiency, and it is an administrative rather than an economic phenomenon.

It is quite obvious that outsourcing consists of two components- the administrative and the economic one (Table 1). [1]

Table 1

Administrative and economic aspects of outsourcing

We should make a point here that outsourcing is only available for the legal entities.

We cannot ignore the fact that Russia takes last level of outsourcing development in comparison with other countries.

«If there is something that we cannot do better and cheaper than our competitors, there is no point in doing it at all, this kind of work we need to transfer to those who perform it with clearly better result», — as noted by Henry Ford 80 years ago. Today, it is proclaimed several thousands of top managers from different corporations and companies. Outscoring extends in all spheres of business. [2]

A number of some Western consulting companies have become entirely outsourced. Control of the activity of the affiliates is assigned to the supplier services (provider) under the outsourcing.

The current trends in the outsourcing field.

Top — management has to understand where the company operates and what kinds of the specific goals will achieve the company with the help of outsourcer in future.

At the moment, one should note here that there are two main trends in sphere of outsourcing. The first trend is the movement from processing of operations to outsourcing of business-processes. The second one is the movement from a single process to various processes to get more competitive advantages.

It would be unfair not to mention that fact that there are three basic types of outsourcing. [5]

1)                 Regular outsourcing. Companies transfer their secondary processes at outsourcer’s risk. Outsourcer can help to reduce costs and provide opportunities to managers of the company for concentrating on more important things.

2)                 Joint outsourcing. Companies become partners of services. They want to upgrade their processes, also have two goals such as reducing costs and increasing flexibility of the company in marketing conditions.

3)                 Outsourcing with elements of the reorganization. The companies combine efforts with their partners and transform the whole structure of the business to achieve revolutionary and sustainable improvements of their activities, often it is based on a new business processes and IT-facilities.

Let’s pay your attention to the functions which can be outsourced. [5]

Many companies are fully satisfied with regular outsourcing that helps them to reduce the costs. However, a proposal of outsourcing with elements of the reorganization is said to be more effective. This outsourcing with elements reorganization is characterized simple but powerful structure: efficiency and productivity, also the acquisition of new capacities and capabilities, both inside and outside of the financial services to make growing economic value. This in turn works to finance strategic initiatives and support growth of income. Outsourcing with elements of reorganization requires significant investments. It is common for information technology and management of changes.

Searching of additional funds can be a problem for the budget for the current year if the manager wants to find it quickly. This is one of the reasons why the corporate world has enough big interest in cooperation with the outsourcing partner. It allows creating the perfect organizational structure of the company reducing costs and improving activity of processes, also ensuring growth of profit.

When selecting outsourcing you should carefully analyze the degree of changes that are expected to be carried out and the level of increase in the cost which the company expects to achieve.

If the right of choice is given by managers, they will prefer to avoid large changes and choose the strategy of successive changes. But according to statistics, companies need to change their business — models much more often than before. No wonder that even the industrial giants lack the skills and capacities for implementation with their efforts to achieve such changes.

Companies which have the figures lower than their competitors should think about using outsourcing elements of reorganization to take good position in the market. Such companies typically look for integrated services provider trying to establish a core business, while simultaneously focusing on the reorganization. They need stability, security, and reliability.

According to the institute of outsourcing there are IT-outsourcing and outsourcing of business processes. As a rule all companies start using outsourcing from IT-outsourcing and then other types of outsourcing.

The company gives a part of its current productive processes or even the whole process to other company. Moreover, there is the option of selling a number of its own departments to other companies.

First of all, productive outsourcing allows companies focusing on development of entirely new products and services what is important under uncontrolled conditions and developing technologies. Secondly, productive outsourcing allows increasing the flexibility of production because it is easier to redesign a productive process in small factories.

Outsourcing of business-processes involves the transfer of some processes which are not basic to another company. [4]

For productive companies the next functions can be outsourced:

1)      Personnel Management;

2)      accounting;

3)      marketing;

4)      advertising;

5)      logistics.

Outsourcing of business processes is a dynamic developing type, especially in sphere of accounting and finance.

As of today, outsourcing is not widespread however it has tends to the quick development and introduction on the market. The top-managers fear of losing control, avoid trusting their suppliers, many of them are used to following the existing stereotypes and principles.

But these fears can be attributed to the low awareness in this field. Some experts believe that outsourcing with elements will become common phenomenon for major international companies. Besides that, it will appear more and more new servicing providers that will occupy small niche in the market or focus on the most detailed range of tasks.

According to the famous American consultant J. B Heywood, it was allocated some new forms of outsourcing such as a joint company and share in the equity of partner. The joint company becomes a major supplier of products and services on a permanent basis that can provide a part of their employees and their equipment for the joint using. The joint company can develop a way of business by selling their products and services in foreign markets (to other companies).

In Russia using of outsourcing has many problems. Working control of the company often requires even more stringent than similar department within the company.

Russian companies differ in size and scale of business, also each region has its own specific features such as standard solutions for each client which are not always appropriate for other companies.

Therefore, the possibility of using experience of others is very problematic in Russia.

Another problem is the responsibility and qualification of contractors which is often not possible to estimate at a glance.

In spite of outsourcing has not been widely spread in Russia, but owning to it many companies really save their money. However, this economy has not yet fully corresponded outsourcer’s prognoses but the analysts speak about positive prognoses in future.

Companies should keep the next tips for improving conditions about outsourcing:

1)      to make appropriate changes in legislation;

2)      to carry out actions to support the development of outsourcing in Russia;

3)      to organize various trainings and seminars for teaching and raising the level of training personnel skills of enterprises. [5]

The economic situation in Russia (namely legislative weaknesses and mentality of business relation) inhibits development of process. Also it does not help acquisition of opportunities in this sphere. The above-listed factors increase possibility of leakage of information and loss of control over the process. It is important that in Russia many activities are semi-legal character which greatly complicates the existing situation. [3]

References:

1.                  Outsourcing forms in modern international trade// World economy and international relations. Kotlyarov I. D. — 2011. — № 6. — pp. 65–72.

2.                  Outsourcing and outstaffing. High management technologies: study guide. Anikin B. A., Rudaya I. L. Infra-M, 2011.

3.                  Outsourcing company management based on self-regulation. “IT Management” magazine.LyubimovV.,2013

4.                  Process outsourcing. Problems and solutions. Filina F. N. GrossMedia. 2008

5.                  Outsourcing.“Sales expert” magazine special edition. Peshkova T., Konik N. V.