Outsourcing Is Picking Pace

Outsourcing Is Picking Pace

by: Mansi gupta

BPO or Business Process Outsourcing is a very common and mushrooming phenomenon these days. BPO can be defined as the accomplishment of a business task from some outside agency. For instance a company can ask or hire an external agency to maintain its old records and accounts. The phenomenon of outsourcing was not so well established before a decade. Initially some of the relatively small and low grade jobs like old storage record of the company were outsourced in United States. Gradually with the budding success and confidence, valuable and crucial jobs like payroll accounting, human resource tasks – recruitment, training and development of employees joined the fray. Outsourced jobs most often involve the ones, which need to be performed on a regular or daily basis. The companies now no more perform such tasks which they used to perform themselves. Like hiring of a consultant company for training of new employees, getting advertisements made from an advertising firm across the seas. Outsourcing has many benefits. It allows a company to identify and focus on its core competencies. The company can outsource every other task that can be taken up by outside agencies and that requires significant time and energy (like training of new employees, making recruitments, marketing and manufacturing of products etc.). This lends the opportunity to the company to fully concentrate on its core competency. Along with this the low cost factor is equally important. The companies in US and Europe by outsourcing their jobs in countries like India, Japan and China accrue huge profits in terms of cost saving. Such savings in cost are in the form of cheap and skilled labor, manufacturing or production of the goods etc. This in turn is a result of variation in salary structure across the globe. Outsourcing proves quite worthwhile and beneficial during the period of slump in a country’s economy. When profits are under threat and it becomes imperative to reduce the costs, outsourcing is perhaps the best way to mutilate the costs without compromising on the good quality of work. Besides this BPO also liberates big companies of labor oriented problems or issues, thereby enabling them to be more focused and streamlined to enhance their work. There are various sectors in which outsourcing is holding grips. These are Financial sector, IT, Telecommunications, Advertising, Courier Services and Customer Support Services. A case in point can be Spectra mind that undertakes many of the crucial tasks (insurance, telecom etc.) for clients in US and Europe. But the outsourcing process is not acceptable to everyone due to its complementary disadvantages. People often believe that outsourcing leads to drainage of jobs. It is believed to create an acute unemployment for the qualified professionals of that very nation. Moreover there the threat of delayed work failing to meet the deadlines and targets and most importantly that of leakage of confidential information is always lurking in overseas outsourcing. The companies also do not get to confront or communicate directly with their key clients which makes them all the more dependent on their offshore agencies. Like every other phenomenon, outsourcing in business too has tail of ethics attached to it. However, the truth is that it is one of the best ways for a company to expand, enhance its growth and minimize the costs. But a company should not be just enchanted by the merits of outsourcing but should also be considerate of its pitfalls. About the author: Mansi gupta writes about Outsourcing topics. Learn more at http://www.outsourcingconcerns.com.

Outside The Box

Outside The Box

by: Phillip A. Ross

Outside The Box Thinking "outside the box" or as it is sometimes called, "coloring outside the lines" is a popular idea in the business world today. People and organizations are told to think outside the box or color outside the lines as a way to stimulate creativity when they need to solve problems like streamlining production, establishing a new product, or developing a new process. And it's true that creativity and innovation often arise from unexpected and unconventional thinking. But there is a serious problem with trying to apply such thinking too broadly. For instance, creativity is valued in art and advertising, but not in banking and accounting. An accounting firm recently ran an ad suggesting that it could think "outside the box." Do you really want your business to be associated with creative accounting? Aren't accountants supposed to put the numbers in the right box? Wasn't creative accounting a serious problem for Enron? In reality, clear thinking and the creativity that it produces are rarely a matter of thinking outside the box. And coloring outside the lines is for the most part just sloppy workmanship. The art of clear thinking is a matter of putting thoughts in to the right boxes or categories. Clear thinking is a matter of mental organization. Conversely, sloppy thinking involves the confusion of categories, of putting ideas into the wrong boxes or not putting them in order at all. Is a child who will not straighten his or her room creative or just sloppy? There is a significant difference. While creativity sometimes looks sloppy to an outside observer, it does not issue from sloppiness. Picasso was a creative artist. But his creativity was not a matter of the art he produced. In reality his abstract work is technically sloppy. It looks like the work of a child. Picasso could sell his abstract art only because he had previously established himself as an artist who could color inside the lines very well. Had he not first proven his artistic talent in the traditional way, his abstract art would have been worth much less. He used his reputation as a traditional artist to establish a new direction in art. He didn't so much color outside the box, as he expanded the boundaries and definition of the box. But the point is that his abstract creations were valuable only because of his proven abilities in the traditional arts. Contrast my own efforts to establish myself as an abstract artist. My art has gone unnoticed because I have not been able to prove myself as a traditional artist. Not that I actually tried to do so, but I am using myself as an example to make the point. The creativity of a novel idea requires the discipline of order and structure to be valuable. Picasso's art is valuable because he was an accomplished painter who intentionally colored outside the lines. My art is not valuable because I am not an accomplished painter and I accidentally color outside the lines. While the two products may look similar, the difference is critical. Creativity is more than breaking the rules. Similarly, Joseph Heller was able to break the rules of English grammar in his book, Something Happened (Scribner, 1974), only because he was intimately familiar with them. Having taught English at the University of South Carolina, he was a master of grammar. And only out of his expertise could he creatively exploit, expand and redefine the boundaries of grammar. And so it is with regard to thinking outside the box. Thinking outside the box apart from being able to think inside the box is worthless. Such thought is just plain sloppy. Thus, the suggestion that creativity lies in the ability to think outside the box is mostly nonsense. Creativity issues from talent, ability and discipline. Talent must be forged and shaped on the anvil of discipline in order to develop ability. Great ability is always the result of study, discipline and practice. Creativity is more a matter of seeing that the boxes themselves are inadequate and suggesting a better arrangement or a better definition. Creativity doesn't simply discard the boxes, it redefines and/or rearranges them after becoming intimately familiar with them. Real creativity is always the fruit of discipline and order. Creativity, in order to be genuinely creative and not simply sloppy disorganization, must emerge out of discipline and order as an intentional effort. While a creative idea often comes unbidden out of unexpected places, it requires discipline, study and order to make something of it. Apart from discipline and order, what passes for creativity is nonsense, and to suggest otherwise actually undermines and/or weakens the creative process. What does this mean for our industry? Distributors and suppliers should apply themselves to mastering the basics before attempting to break the rules in the name of creativity. Don't start outside the box. First, establish your ability to think within the box. Master the rules before you suggest breaking them. For example, before a distributorship presents a wild, innovative concept to a client for a campaign, it should first establish its expertise with campaigns and/or ideas that have a track record of yielding good ROI. Designers, artists, and copy writers should establish their mastery of basics before experimenting outside the box. For the most part the important stuff is inside the box.

Non-Profit Organizations - What Are They?

Non-Profit Organizations - What Are They?

by: John Day

Definition of Fund; Assets; and Fund Balance According to the “Financial and Accounting Guide for Not-For-Profit Organizations” written by CPAs Gross, Larkin, Bruttomesso, and McNalley, (fifth edition, pg 25) the definition of a these three terms is as follows: - A fund is any part of an organization for which separate account records are kept. - Assets are valuable things owned or controlled by the organization. Types of assets include cash, investments, property, and amounts owed to the organization. - Fund balance is the mathematical number obtained by subtracting total liabilities from total assets; it is a numerical representation of the net worth of the organization, but has no other significance. Fund balances do not exist except on paper; unlike assets, they have no intrinsic value and cannot be spent. Both assets and fund balances (as well as liabilities, revenues, and expenses) are part of the accounting records of a fund. What are non-profit organizations? A few years ago, a dentist client of mine, who did a lot of work for low-income patients under the California medical assistance program called “MediCal”, asked me a bizarre question. He wanted to know if he could be considered a “non-profit organization” since he did so much MediCal work. At first, I thought he was joking, but he was serious. I told him that just because he charged less for his services did not qualify him to become exempt from paying taxes. In fact, he made a very nice profit. However, this is a good example of how non-profit organizations (NPO’s) are misunderstood by a large segment of the general public. Most countries around the world have NPO’s, but outside the U.S. they are called non-governmental organizations (NGOs) or civil society organizations. These organizations are exempt from paying taxes because they provide some sort of public benefit. They are said to enhance the fabric of society. They differ from a business organization in that there are no owners. A Board of Directors oversees operations of the organization. An Executive Director, who reports to the Board, functions like a CEO of a business. Usually there is a lengthy application process to establish the mission or purpose of the organization before exempt status is granted. According to Independent Sector, an organization that serves as an information resource for non-profit boards, there are 1.5 million non-profits that, when combined, have general annual revenues totaling more than $670 billion dollars. They report that six percent of all organizations in the U.S. are non-profits and one in twelve Americans work for a non-profit. That’s big business and has caused profit-making businesses to become alarmed that some of these NPOs are competing unfairly. Think about a private hospital as compared to a non-profit hospital. The profits of the private hospital are taxed, but the NPO hospital can apply all their profits to higher salaries, more equipment, etc. Hence, there is high scrutiny of NPOs by the Internal Revenue Service, state Attorney General offices, private watchdog organizations, and the press. There are all types of non-profit organizations. Public charities are exempt under the Internal Revenue Service code 501(c)(3). These organizations, such as hospitals, museums, orchestras, private schools, churches, scientific research organizations, soup kitchens, etc., obviously do much more than provide free care and services to the needy. To qualify for exempt status, these organizations must show broad public support, rather than funding from an individual source. In addition, there are private foundations, colleges, universities, social welfare organizations, professional and trade organizations, and many more. Governmental organizations such as communities and agencies are also non-profit organizations, however, their accounting and record keeping is handled quite differently from 501(c)(3) organizations. How are non-profit books organized? Briefly, the books of an NPO are organized in the same way as a profit-making business except for a few differences. It’s okay for a non-profit to make a profit because there may be many uses the board has planned for the extra money. But, NPOs traditionally refer to profit as “Excess Revenues over Expenses” to avoid being mischaracterized as a profit-making organization. A net loss is called “Excess Expenses over Revenues”. Recall the fundamental equation that makes double-entry accounting work: ASSETS = LIABILITIES EQUITY Instead of the term EQUITY, a non-profit will substitute the words FUND BALANCE or more recently NET ASSETS. The concept is still the same. After subtracting liabilities from assets the difference is what is owned by the organization. Where NPOs differ in their financial statement presentation from profit-making businesses is what is called Fund Accounting. Obviously, the presentation varies depending on the purpose and size of the organization. For instance, a Little League baseball organization may only have one fund for which they have to account. They also may not have any restrictions placed on the usage of contributions they receive. Everything is straightforward. Or, a scientific research organization may be working on various projects at the same time with funding sources made up of private and governmental grants or contracts, private donations, sales of research documents, some of it restricted to specific expenditures and the rest unrestricted. The accounting challenge is to report the revenue and expenses accurately for each fund or project and be able to combine all the funds into one cohesive financial statement. The problem in the past for the contributors was that they could not easily tell from the financial documents what funds were restricted and unrestricted and whether their contributions were being spent properly. The Financial Accounting Standards Board (FASB) decided that all external accounting should be done using the “Net Assets” approach as opposed to the “Fund Balance” approach. Essentially, the net assets approach requires that the equity of the organization be presented with three classes of assets, i.e., Restricted Assets; Temporarily Restricted Assets; Unrestricted Assets. You can still use Fund Accounting for internal bookkeeping purposes, but for external reporting purposes you are required to disclose your restricted and unrestricted funds. If you have no restricted funds, then it is not much of a challenge. One of the key factors in setting up non-profit books is a well thought out Chart of Accounts. In other words, this is choosing which general ledger accounts are the most appropriate for recording revenue and expenses, etc., and organizing them in such a way as to provide meaning. Some U.S. organizations simply follow the same format found on the 990 IRS form for non-profits. They do this so that their financial statements are in conformity with the way that return is organized. This makes it easy to transfer information from their financial statement to the 990 form. Nevertheless, the main thing is to design your accounts so that they tell you exactly where your revenue came from and what expenses are related to that revenue. I have worked with NPOs that have not done a very good job of this in the beginning, and I can testify that it is no fun trying to straighten the accounts out later. It may be well worth the money to hire a competent accountant to guide you through the set up phase. Better yet, let your accountant review your books a couple of times a year just to make sure you are on track and save yourself some year-end grief. About the author: John W. Day, MBA is the author of two courses in accounting basics for non-accountants. Visit his website at http://www.reallifeaccounting.comto download for FREE his 3 e-books pertaining to small business accounting and his monthly newsletter on accounting issues. Ask John questions directly on his Accounting for Non-Accountants blog.

Business networking groups

Networking

by: Brian K Grinonneau

Put join a group on your to do list with a big underline, star and happy face. You’ll be glad you did for more reasons than you can count. And the advice is coming from this confirmed non-networker who, in 20 years of business, considered networking a colossal waste of time. The old dog is here with a new trick. Business networking groups bring together people who, most times, are self- employed, successful entrepreneurs or corporate folk paid truly paid for their efforts. (see commissioned salesperson) The types of businesses these networkers represent vary, but the commonality is they meet to share, learn and become better at their craft. The networking meetings are held at times that are fairly convenient even for the most type A business owner. Early morning, mid-day or evening are the popular meeting times and all involve food of some type, contests, and sometimes cocktails. There is a networking etiquette that is a mix of business sense and remembering what your mother taught you. Be nice. Smile. Be genuine. Don’t show up looking to dazzle everyone you meet with your slick sales pitch. To be sure, meet a lot of people, hand out a lot of cards, but give before taking. Listen more than you talk. Question more than you answer. Care about someone else and their plight. What’s in it for me? That’s the common question in many business conversations. Here’s what you get by joining a networking group: New contacts--what business can’t use more contacts? The fellow businesspersons you meet might be able to use your service. They also know lots of people and aren’t shy about recommending you. You look like an expert to your customers. As you meet new professionals, you won’t hesitate to recommend them to your customers to handle tasks you don’t. Your stock will rise appreciably with your customer for being such a willing problem solver. Education. The meetings always revolve around a guest speaker who will bring to you valuable information about topics ranging from accounting to law, sales to hiring an employee and much more. Friendship. Everyone can use more friends. Imagine playing golf with those that share your passion. Advice. Ask around and fellow networkers will be glad to dispense it for free and many have already faced the same situation you now have. Find a local networking group and get involved. It will be one of the best decisions you ever made. Go ahead. Write it down. Your to do list is waiting. About the author: Brian Grinonneau is the general manager of McMann and Tate Advertising, an agency working exclusively with small business clients to help them cut through the clutter and stand out from the crowd