Wish to track the real costs of Outsourcing?

Outsourcing for the first time and wary about what would be the costs involved for setting up outsourcing works. Continue reading this and it may help you resolve some doubts on the costs, to set up outsourcing requires various transition costs. Mainly there are two broad categories of outsourcing costs such as transition cost and base costs. But they are often altered or made to fit as per the contracts results in degradation of work quality or leaves stained relationships.

Transition costs are probably the first cost to the outsourcer and it may leave you surprised as clauses which you never saw pops up. While signing and negotiating a contract keep in mind of even the smallest or single sentences involving costs or legal issues. If it’s somewhat ambiguous ask the service provider to clarify the point and give a proper written explanation with it. Various other costs part of this transition bracket is various on-site visits and workshops and presentations by service provider. Very often delegates or experts from the provider side go on-site probably to discuss the technological aspects, requirement analysis, to validate in-scope services, assign project teams, frame communication plan, creating milestones for the project etc. This is one place we can focus and track all the transition outsourcing costs. Data center migration is included as part of the transition, it will also include planning and testing of systems, acquiring and transferring of licenses, installation and a stabilization period. If service desk is part of the outsourcing deal, documentation of call flow processes, implementing the service desk & desktop automation and monitoring tools as well the development of the policy and procedure manual can be expected.

So when is the time, this transition costs comes into picture? These costs being the initial expenses are obviously to be paid at first; these costs are often paid during the first year of contract, though there is a constant risk with service provider of losing out on terms with change in business scenario over the business period. But there is a new trend of paying my milestones, so this ensures providers of timely payments. The benefit of paying by completed milestones ensures delivery according to the Transition Schedule and Master Service Agreements (MSA’s). The advantage of this policy is it reduces paying high charges up front and decreases the risk by delaying payment of work left incomplete. It also keeps a check on the deliverable s and payments and if promised deliverable s are not completed the invoices shouldn’t be paid for that period.

The doubt which may still persist is the difference between transition costs and base costs. The foremost difference is that they are not paid together and transition costs are simply paid before base costs. Providers often don’t differentiate between the two and during negotiation overlap both the transition and base costs. Just as a simple reminder, Base costs are generally not paid until the service is online. The difference between Effective and Commencement dates should be clear to understand this difference. Effective date is when the contract is signed according to Master services Agreement and the Commencement date is when the provider actually assumes the responsibility for the services. Example a 10 year deal with 1 year of transition is actually worth 9 years of base charge and 1 year of transition costs.

Just a simple suggestion, costs analyzed would be always on the lower side of costs finally incurred. The original costs would be at-least 10-15% higher than costs estimated. So to minimize the costs a constant scrutiny is required.

For more good articles on IT, SMBs and outsourcing refer to Dr. Subbu Murthy's blog

SMO: Patience is the key to be visible

Social media optimization (SMO) is growing immensely in recent times with companies looking to enhance their presence on the web. New and new methods for SMO are being explored; in fact people are trying to implement both SEO and SMO for increasing visibility over the web space. One thing which I can say with my experience after playing with both of them for a while is that SEO and SMO are interlinked and implementing only one of them cannot sustain the top web visibility for long. One should be careful when targeting SMO as it requires a lot of care. A few tips and guidelines before you start SMO assignment for your organization are mentioned below

1. Try and be active on the popular domains and blogs related or unrelated (with good participation and high page ranks). Even if they do not directly relate to your interest try your hand on them rather posting on inactive though relevant blogs or domains (You will often find relevant domains are not much active anymore). It gives results quickly in terms of visibility and the people noticing you may be much more.

2. Never duplicate content on the web, try to be a shade different every time even if posting the same content, this increases the counts for the same content because only a human mind can locate the similarities in the two and not the machines.

3. Start commenting on a few popular blogs and leave your url/website as your signature which is a common trend these days (Although many of them do not allow search engines to follow your link). But try to be precise and meaningful as much as possible and remember the golden rule
“First impression is the last impression.” Improper or highly irrelevant comments can lead to ignoring or even banning of your account on such sites.

4. Start building your network on popular social networking sites (This is presumed to be the easiest but in fact it is one of the toughest part.). I think I need not name any and if you have read till this point then I can safely assume you must be aware of them. Take your time, don’t be stupid by sending mass invitations, and keep building your account over a period of time (probably a few weeks).

5. Press releases are one sure shot way to increase your popularity as the results show up instantaneously. A few popular PR sites would pop on top list of search engines with keywords such as “Free press release”, “submit press release” etc. Do remember Tip #2 before publishing your content on the web.

6. Social bookmarking: One of the most important ways to get noticed, it is easy if your brand is popular and may act as patience tester otherwise (Infinite wait for approval if you looking for free submissions). Many social bookmarking sites exist and the popularity varies in different parts of the world. Target the social network which your business is trying to focus on, be specific that is the key.

7. Article writing is one way many top SMO writers promote but personally I am not an advocate of such philosophy. Article writing is like a lottery if your article gets accepted and appreciated by a few people (a very low chance) it may drive much of your traffic (thanks to mouth publicity) but if it doesn’t work out it’s a total waste of time and resources.

The key to SMO as I mentioned in the title itself is patience. Keep doing your part and wait, results would show after a little while. Just remember all this would yield results in some time but if not properly supported by an equally good SEO they may soon fade out. At this moment I would really love to look at the smiles on the faces of those who read this article just after or in between their SMO assignment, I am sure they have a story to tell.

For other good articles on IT, SMBs/SMEs you can also refer Dr Subbu Murthy's blog.

Tips for SMBs to maintain business relationships in tough times !!

It is rightly said "If you want to witness true character of a Man wait till he faces tough times or is in dire straits". That is exactly how it applies to business world fortunately. A few may doubt on how is it so easy but with a little experience and white hair all the logic comes in naturally. Herein I present a few suggestions on how SMBs can sustain business even in these turbulent times:

1. Concentrate on your core technologies and outsource work which is not your expertise, just remember the sole purpose of outsourcing is cost saving and saving of resources which are a prime necessity for business to grow or sustain. Even HR outsourcing and hiring virtual assistants is trend these days, leverage the benefits essentially in the times when everyone else is fearful.

2. Renegotiate your contracts with service providers, take proper legal advice and talk it out with your service provider. They may understand and respect your decisions if you have had a long lasting relationship with them. Make suitable adjustments to your contracts and keep revising them regularly depending on your company and market situations.

3. Look for service providers who act more so as a partner rather than just a simple contract based relationship. This not only improves communication but also working environment where both the parties deal in. Service provider promotes your business further providing valuable links and vice-verse.

4. Take the help of a professional consultant; just remember hiring a professional consultant would be still far cheaper than having it analyzed in-house. So do not worry much before taking a consultant’s advice as low margins are far better than huge losses.

5. Trust and communication: The last but not the least, you cannot do much better than being calm and composed when all that could be done has been taken care off. Be patient with your service providers and keep communicating, this keeps the relationship going and sense of insecurity within the service provider camp reduces and hence full commitment assured from them in terms of work quality.


These small suggestions may not have covered everything but they are guidelines any SMB can refer to. Any suggestions and points which I might have missed out are welcome as this is open discussion to benefit all the SMBs/SMEs.