Small and Medium-sized Businesses (SMBs) should carefully consider and prepare before engaging in offshoring. One special consideration is establishing quality metrics for their processes.
A business needs to be aware of its current quality of in-house operations and identify areas for improvement. Companies should consider offshoring only when in-house processes reach satisfactory quality to ensure that standards are not compromised.
What are quality metrics?
Quality metrics in business are quantifiable measures used to assess the performance, effectiveness, and overall quality of a product, process, service, or system. Quality metrics include:
● Quality indicators
● Key performance indicators (KPIs)
● Performance metrics
● Quality measures
● Quality standards
● Quality indices
● Quality benchmarks
● Quality parameters
● Quality criteria
Quality metrics help Small and Medium-sized Businesses (SMBs) evaluate the degree to which their operations meet predefined standards and objectives related to quality.
Monitoring and analyzing these metrics provide insights into the effectiveness and efficiency of business processes, enabling SMBs to identify areas for improvement and make informed decisions.
Examples of Quality Metrics
Below are some examples of quality metrics in different business contexts that illustrate the diverse range of quality metrics that businesses can use to evaluate different aspects of their operations.
Note that the selection of specific metrics depends on the nature of the business, industry standards and the organization’s strategic objectives.
Regularly monitoring and analyzing these metrics enables Small and Medium-sized Businesses (SMBs) to drive continuous improvement and enhance overall quality performance.
Why do quality metrics matter when considering offshoring?
Quality metrics matter when offshoring business operation verticals because they provide a structured approach to maintaining and improving the quality of processes, products and services.
Here are several reasons why quality metrics are crucial when considering offshoring:
| Quality Metric | Example Metric | |
|---|---|---|
Customer Satisfaction: | Net Promoter Score (NPS), Customer Satisfaction Score (CSAT) or number of customer complaints | |
Product Quality:
| Defect rate, product returns or warranty claims. | |
Service Quality:
| Service response time, resolution time or the number of service-related escalations. | |
Process Efficiency:
| Cycle time, process lead time or the ratio of input to output. | |
Employee Performance:
| Error rates, employee engagement scores or the number of training hours completed. | |
Supplier Performance:
| On-time delivery rate, defect rate in received goods or supplier corrective action requests. | |
Financial Metrics:
| Cost of quality, return on investment (ROI) for quality improvement initiatives or the percentage of revenue spent on rework. | |
Compliance Metrics:
| Number of regulatory compliance violations, audit findings or adherence to industry certifications. |
Note that the selection of specific metrics depends on the nature of the business, industry standards, and the organization’s strategic objectives.
Regularly monitoring and analyzing these metrics enables Small and Medium-sized Businesses (SMBs) to drive continuous improvement and enhance overall quality performance.
Why do quality metrics matter when considering offshoring?
Quality metrics matter when offshoring business operation verticals because they provide a structured approach to maintaining and improving the quality of processes, products and services.
Here are several reasons why quality metrics are crucial when considering offshoring:
Ensuring Consistency:
Quality metrics help establish a baseline for the level of quality that a business expects. Before offshoring, it’s essential to have in-house operations at a consistent and satisfactory quality level. It ensures that the offshored processes maintain the same standards, contributing to consistency in overall product or service delivery.
Performance Evaluation:
Quality metrics provide a means of evaluating the performance of both in-house and offshore operations. By measuring key indicators, Small and Medium-sized Businesses (SMBs) can identify areas of strength and weakness, allowing for targeted improvements. This evaluation is vital to ensure that offshoring does not lead to a decline in overall quality.
Risk Mitigation:
Offshoring introduces additional complexities, such as different cultural contexts, time zones and communication challenges. Quality metrics act as a risk mitigation tool by helping businesses anticipate and address potential issues. They enable proactive management of quality-related risks associated with the offshoring process.
Alignment with Business Goals:
Quality metrics should align with the broader business goals and objectives. When considering offshoring, it’s important to ensure that the offshore team contributes to achieving these goals while maintaining or enhancing product/service quality. Metrics help in tracking progress and alignment with strategic objectives.
Effective Communication:
Clear quality metrics facilitate effective communication between the onshore and offshore teams. When everyone is working toward the same quality standards, it minimizes misunderstandings and helps establish a common language for discussing and addressing quality issues.
Client and Customer Satisfaction:
Offshoring often involves delivering products or services to clients or end customers. Quality metrics play a significant role in ensuring that the expectations of clients and
customers are consistently met or exceeded. This is critical for maintaining customer satisfaction and loyalty.
Continuous Improvement:
Quality metrics are integral to the continuous improvement cycle. By regularly monitoring and analyzing metrics, businesses can identify opportunities for enhancement and implement corrective actions. This culture of continuous improvement applies to both in-house and offshore operations.
Offshoring is often considered for its cost-saving benefits. However, maintaining quality is essential to prevent hidden costs associated with rework, customer dissatisfaction or damage to the brand reputation. Quality metrics help control costs by preventing quality-related issues that may lead to financial losses.
Quality metrics serve as a guide to ensure that offshoring activities align with overall business objectives, mitigate risks and contribute to long-term success.
Establishing and monitoring quality metrics is a proactive strategy to address potential challenges and optimize the benefits of offshoring for a business.
How do we implement quality metrics?
Consider an example of applying quality metrics to accounting standards for fiscal management in a business. In this scenario, the company aims to ensure the accuracy, transparency and efficiency of its financial processes.
We must define the objective, identify and select quality metrics, and create implementation steps to follow.
OBJECTIVE STATEMENT
Improve fiscal management by ensuring accurate financial reporting, transparent accounting practices and efficient financial processes.
SELECTED QUALITY METRICS
Here are some quality metrics to implement for accounting standards for fiscal management:
For our purpose, we’ll only tackle three: compliance with accounting standards, efficiency of the accounts payable process and audit preparedness.
1. Compliance with Accounting Standards:
Metric: Percentage of financial transactions compliant with Generally Accepted Accounting Principles (GAAP) or relevant accounting standards.
Target: Achieve 100% compliance with accounting standards.
Measurement: Regularly review financial transactions, ensuring adherence to accounting standards and track the percentage of compliant transactions.
2. Efficiency of Accounts Payable Process:
Metric: Average time taken to process vendor invoices.
Target: Reduce the average processing time by 20%.
Measurement: Monitor the time taken to process invoices, identify opportunities for process streamlining and implement changes to improve efficiency.
3. Audit Preparedness:
Metric: Time required to prepare for external audits.
Target: Achieve a 20% reduction in audit preparation time.
Measurement: Streamline documentation processes, improve record-keeping and monitor the time taken to prepare for external audits.
IMPLEMENTATION STEPS
1. Communicate Objectives: Clearly communicate the fiscal management objectives and the importance of the selected quality metrics to the finance team.
2. Data Collection: Establish processes for collecting relevant data, such as financial statements, processing times, compliance checks and audit preparation timelines.
3. Set Targets: Define specific and measurable targets for each metric based on industry standards, best practices and the organization’s goals.
4. Implement Measurement Tools: Utilize accounting software, audit tools and reporting systems to facilitate the collection and analysis of data.
5. Regular Monitoring: Regularly monitor the selected metrics, conduct periodic reviews, and analyze results to identify trends and areas for improvement.
6. Implement Corrective Actions: Address any issues or deficiencies identified through the metrics by implementing corrective actions, such as process improvements, additional training or policy changes.
7. Report and Communicate: Communicate the results of the quality metrics to relevant stakeholders, ensuring transparency and accountability.
8. Continuous Improvement: Continuously review and refine the quality metrics to ensure they remain relevant and aligned with the organization’s fiscal management goals.
By applying these quality metrics to accounting standards, the business can enhance its financial processes’ accuracy, transparency, and efficiency, ultimately contributing to effective fiscal management.
When these standards are set, you’re ready to offshore certain verticals and have a template for your offshore team to follow.
Applying Quality Metrics When Choosing an Offshoring Partner
Small and Medium-sized Businesses (SMBs) can also use quality metrics when choosing an offshoring partner.
Applying quality metrics when choosing an offshoring partner is a strategic process that involves defining clear expectations, setting measurable standards and implementing ongoing evaluation mechanisms.
When implementing quality metrics for choosing an offshore partner, follow these key steps:
1. Define Objectives: Clearly state the goals and expectations for the offshoring partnership.
2. Identify KPIs: Choose relevant Key Performance Indicators aligned with objectives, such as deliverable quality, timeliness and communication.
3. Establish Benchmarks: Determine benchmarks based on industry standards to serve as reference points.
4. Create SLA: Formalize metrics in a Service Level Agreement, outlining responsibilities and consequences for non-compliance.
5. Implement Monitoring: Set up monitoring systems using project management tools and regular progress reports.
6. Review Mechanisms: Schedule regular review meetings to assess performance, discuss challenges and find solutions collaboratively.
7. Utilize Quality Audits: Conduct periodic quality audits, including random sampling and process evaluations.
8. Collect Stakeholder Feedback: Gather insights from internal stakeholders and end-users to gauge the partner’s performance.
9. Continuous Improvement: Encourage a culture of continuous improvement, collaborating with the partner to enhance processes.
10. Adapt Metrics: Be flexible in adapting metrics based on evolving needs and experiences.
11. Incorporate Risk Management: Identify and mitigate potential risks to quality through proactive risk management.
12. Communication and Collaboration: Foster open communication and collaboration to ensure a shared understanding of expectations.
By following these steps, Small and Medium-sized Businesses (SMBs) can establish a robust framework for evaluating and maintaining the quality of their offshore partnerships, contributing to long-term success.
Offshoring to the Philippines
Small and medium-sized businesses (SMBs) may want to consider offshoring to the Philippines. It can provide SMBs with cost savings, access to high-quality services, and the opportunity to tap into a growing market.
Cost Savings: As of February 2023, about 34% of small businesses outsource their digital marketing functions, making it the second most outsourced function in SMEs. Some of the main reasons include cost savings, access to advanced tools and systems, and the opportunity to work with more skilled professionals.
Cost Efficiency: Offshoring to the Philippines allows businesses to cut workforce expenses by up to 60% and operation expenditures by 40%-50%. The country’s low cost of labor and operating costs make it an attractive destination for SMBs looking to save on costs.
Strong Reputation for Expertise: The Philippines has developed a strong reputation for its expertise in various fields, including digital marketing, customer support, IT, and graphic design. By outsourcing to the Philippines, SMBs can leverage Filipino professionals’ expertise, creativity and knowledge to drive better results and achieve their marketing objectives.
Large and Growing Market: The Philippines has a large and growing middle class, making it a significant consumer market in its own right. By outsourcing to the Philippines, businesses can leverage the expertise and experience of local professionals to navigate the local market and access new markets.
However, all these do not matter if you don’t partner with a company that meets your operation metrics.
It is why businesses should consider partnering with iSupport Worldwide.
Why Partner with iSupport?
iSupport Worldwide is listed as a Power Partner by Inc. Magazine, highlighting its top-of-the-line offshoring solutions and dedication to its clients.
The company has consistently met the quality metrics of its clients with a streamlined hiring process that provides top talent and employee programs that retain them.
One of its clients, with an offshore staff of engineers, product development specialists, and accountants, has retained 90% of its offshore team.
Another client was able to realize cost savings, scale their business with ease, and have a dedicated back office team.
The Bottomline
Small and Medium-sized Businesses (SMBs) considering offshoring must prioritize quality metrics to maintain operational standards. Quality metrics ensure consistency, performance evaluation, risk mitigation and alignment with business goals.
iSupport Worldwide is a reliable offshoring partner with a successful track record in meeting quality metrics for client satisfaction and employee retention.
Ready to ramp up your business through offshoring? Contact our team today for a no-obligation consultation and learn how we can help your business thrive.