A Completely Different Way To Assess The Value Of Outsourcing Services Using Total Cost Of Ownership
A Different Way To Evaluate Using TCO As A Method To judge Outsourcing Services: The Total Cost Of Ownership
If you are on the lookout for an outsourcing service this may help you decide what is the best answer for you.
I have been working with personal computers both hardware and software for about 30 years . I believe it was during the 1980′s that I first heard the expression “Total Cost of Ownership” or “TCO”. The purpose of this measurement is to be able to plan effectively and make smart purchase decisions. It allows a person to make apple to apple instead of apple to oranges comparisons. I believe that I can show how this methodology can be utilized on Internet marketing outsourcing services.
Even though you don’t actually “own” the outsource worker you own the relationship. And there’s a cost of ownership in that relationship. To illustrate this point lets examine the direct costs and the somewhat concealed or obscured costs.
We can start with wages. No matter what the number is it’s relatively fixed. The only variations that come into play hinge on your policies relating to sick time, family emergencies, holidays and vacations. Once these policies are set up the costs are really predictable.
Subsequently after this the lines get a little fuzzy. Keep in mind why you outsource to start with. Ideally it is for a combination of four reasons. 1. The individual is taking care of tasks that you do not desire to do. 2. This gives you more time for higher levels of work or higher priorities in your life. 3. The person adds to your expertise. 4. This job is done at a net savings to you.
The actual experience can be be extremely different. Let’s say you find and hire someone from one of the many job boards that have popped up in the last few years. How much coaching will that resource need? If this individual is an untrained and novice independent worker you basically have two possibilities. You can use your time to produce video training and pass them to the person, and then hope they learn the material. The trouble using this approach is that you just sacrificed the 2nd intended benefit – time. The alternative option is to buy training materials for the man or women. This really comes at a financial price to you and reducing the 4th benefit. And until this individual has become a task master at what you need them to do, you have also lost the 1st benefit.
With outsource staff there is an infrastructure cost. Who will pay to repair their pc or get the virus eliminated or carries the cost of a fast internet connection? With an independent resource it is you actually directly or indirectly. In the case of a PC failure – even if you do not pay the repair costs you’ll be losing valuable time whilst the worker tries to put the funds together to have it fixed. If the internet connection is slow it is your work flow that suffers.
Tools: With them your resource may be a star. Without them….. who knows. So which tools do you buy? And in buying them for the resource do you lose the use of them for you? Once again there are tradeoffs. Better tools – faster work – increased productivity but at a price. And that price can be substantial.
And although I would prefer to not mention it there is another consideration – fraud. There is a temptation for the Internet Marketing Outsource worker to accept multiple clients. This may be okay in some situations. Having said that, it is never ok when you have agreed that the resource will work for you full time. No employee can reasonably serve two masters at 100 % capacity full time for more than a day or two.
There is a solution; Hire from a company that will provide oversight, training, infrastructure support and a comprehensive set of tools to accomplish the job. This would be a comprehensive outsourcing service.While many companies provide some of these features as a standard package or on an ala carte basis, only one offers all of these benefits as part of the standard package.