Outsouring risks and rewards matrix

As the owner of a small company, you have probably entertained the thought of outsourcing some aspect of your business. The benefits of outsourcing seem obvious, touted by experts across numerous industries as the answer to cutting costs for business functions ranging from information technology to accounting, marketing and human resources; it seems possible that you could run an entire company without ever hiring a single employee.

Outsouring risks and rewards matrix

This rise in the popularity of cash process outsourcing has also meant significant opportunity for Cash-in-Transit companies. As this trend is gaining in popularity we would like to take a moment to examine the risk and reward of outsourcing.

Cash vaults are expensive to build and maintain. Staffing can also be a challenge as it is not the most enjoyable job and the pay is often relatively low. Avoiding the infrastructure costs and efforts to hire, train and maintain efficient staff can also be a plus.

The risks of outsourcing are often harder to identify. Obvious risks might include inadequate security, insurance and facilities for the work being outsourced. Other risks include the loss of direct involvement in providing a core service to customers.

The effort necessary to investigate a complaint can often take more time and involve more people than before the outsourcing. During our time in this industry we have had many opportunities to visit and observe operations of outsource providers. Specific observations of risk that we have seen and no outsource provider would admit to are: Unsecured facilities that are dressed up to look secure Inebriated staff Inexperienced staff with no option for standardized training Poor vetting practices in hiring Lack of applied cash handling standards within an outsource services company Unsecured transportation It has always been a bit of a mystery to us why Banks would seek outsource opportunities for such a critical core business.

It is also somewhat surprising that the decision process to select an outsource provider is more heavily weighted to financial impact than to product impact. It may be true that many countries in fact have specific and regulatory guidelines for cash processing, handling and transportation.

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It may also be true that many countries do not have any guidelines or industry standards. Perhaps a grass-roots initiative is what is needed to mitigate and maximize the risk and reward of outsourcing.

Read on and ponder what is really happening with your cash when it is handled for you by an outsource provider. Proposed Guidelines for Cash Logistics Companies in India Background The Cash Logistics Industry deals with the physical movement and storage of currency notes and other valuables on behalf of the banks.

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This sector employs about 40, individuals and caters to approximately 80, ATMs for cash replenishment services. There are about 6, cash vans that operate across the country and carry approximately INR 15, crore of cash every day.

Outsouring risks and rewards matrix

This Industry also holds approximately 4, crore of cash overnight in their vaults on behalf of the banks. The services offered by this Industry to the banking sector include: With such a huge magnitude of operations to open up in future, it is absolutely necessary to have strict procedures and processes for the cash logistics companies, along with the required infrastructure to carry out the operations.

Therefore, we are of the view that all those who are engaged in providing such services should follow strict prescribed standards related to premises, security arrangements, security vans, proper selection of staff, training facility etc. This could be achieved only if the RBI issues guidelines and makes it mandatory for the banks to follow such standards during outsourcing of cash logistics facility to any third party.

The area should be closer to withdrawal centres; police stations; or areas with good connectivity in order to ensure security.

The premises should be sufficiently sized to include 2 physically independent areas: A secure area to store cash. The area should be as per RBI C class vault norms. The premises should have all the basic security facilities like: Vault operations should always be under dual custody.

Main vault area should adhere to all safety norms like fire fighting systems, smoke detection systems, emergency lighting, control-room for monitoring the movement of vehicles, auto-dialer, hotline connections to the nearest police station and burglar security systems.

Proper workspace for the staff of the branch should be made available to attend to the day to day work. Typical van layout should conform to the following standards: Van should have 3 independent compartments. The compartment for storing cash to be physically separated and locked from the other compartments.

Vehicles should adhere to the following minimum security guidelines to ensure safe passage of cash and other valuables: Each van should be monitored at all time through a communications protocol. The van should have a GPS installed and also the controlling technology for immobilizing the van whenever required.

Each of the cash boxes must be secured to the floor with separate chains and should have 2 padlocks that can be opened or locked only by using separate keys available with different custodians.Evaluation Matrix for Selecting the Right Outsourcing Partner The outsourcing industry has transformed radically over the last two decades.

What was seen as an emerging phenomenon tremendous having potential few years back, has now culminated into a quality, achieve flexibility, mitigate risks, and gain competitive advantage.

a. Outsourcing > Book Reviews > Business Process Outsourcing: The Competitive Advantage > Business Process Outsourcing: The Competitive Advantage. by Rick Click and Thomas Duening John Wiley information security and sharing of risks and rewards are viewed as ingredients of a successful BPO relationship.

This paper will identify some of the risks and rewards to an organisation when outsourcing IT.

Outsouring risks and rewards matrix

Section 2 of this paper, will define outsourcing. ISO (en) × ISO (en) (ROI), or a cost/benefit analysis, the performance characteristics, major project risks and the opportunities.

The business case addresses, at a high level, the business needs that the outsourcing project seeks to meet. time to market and sharing of costs and rewards. Note 2 to entry: The. The value of ERP outweighs the risks and costs associated with running your business without an industry-specific software solution, like SAP.

The risks of outsourcing are often harder to identify. Obvious risks might include inadequate security, insurance and facilities for the work being outsourced. Other risks include the loss of direct involvement in providing a core service to customers.

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