If you agree with this, you are burning money!
Recently I read an article which went on to say that having partner company work on your back office processing is risky because your organization does not have any control over how your partner company works. It also stated that your company might be in trouble if your partner company is acquired or something to that effect.
Before we go any further I request you to please read something that I had shared with you a few months ago “The need for the expert”. This article explains when and why companies should think about outsourcing work and when they should not.
If you are lazy (like me) and don’t want to read the article here is the one paragraph conclusion from this article. “People and companies outsource work when they are sure that the task or the product is done better by someone else and I can just pay for the work than do it myself. This is a basic human trait. Think about it, people called it division of labor! Companies should think of outsourcing when they believe that a product or service can be done by more than one vendor and can be done more effectively than they would be able to do themselves (Hence, the need for the expert!).”
Now, back to the new claim that you should buy/invest into your partner outsourcing company that work on your back office processing. This is like saying that you should buy up your electric company because you are not sure of how they are producing the power.
In these economic times, it is better for you to conserve your cash and have a good contract with your back office service provider to provide you service an agreed upon SLA. If your partner does not match up to the SLA, have a clear migration path to another vendor. You don’t have to invest into a company to have control over its processes. If you are afraid that your competition might acquire your service provider and that might hurt your business just make sure that you have a better contract with your partner.
If you do want to acquire a company let us do this for the right reasons. The two reasons we would recommend you acquire or invest in a company is to make either get you a bigger customer base and market or an innovation/product offering that can enhance your own offering. Never do a defensive acquisition. This is a doomed strategy!
People create fear, uncertainty and doubt (FUD) about outsourcing. This is a new twist. Remember you have been outsourcing work when you bought your computers from Dell, your software from Microsoft, or bought your car from BMW. Saying that you have to buy your outsourcing company is like saying “I want a glass of milk in the morning, let me go ahead and buy a cow! Mooo!!!
If you need help with the right direction to take for your organization please contact any of the partners at Vantage Agora and we will be glad to help you!
About Vantage Agora
Vantage Agora (VA) is a global provider of back-office solutions, custom IT services and consulting services for companies in the insurance, finance, and healthcare sectors. As a SAS70 Type II audited company, Vantage Agora utilizes advanced data processing and quality control systems on a secured network to ensure efficient, comprehensive management of back-office functions such as payroll, accounting, financial and administrative tasks. Founded in 2004, Vantage Agora has offices in Cleveland and Dallas.
For more information on Vantage Agora’s capabilities visit vantageagora.com or call us at +1-888-246-7211 or email at email@example.com