Off The Plate: Reasons Companies Outsource Services

Decades ago, companies were particular about who runs their business. There’s always an in-house accountant or payroll staff, sales manager,or even an IT personnel.Even if the company does not specialize in accounting or IT,such processes,no matter how inefficient, are kept in-house.

shutterstock_185332604
Image source: rethink-hq.com

But a few years ago, outsourcing has become a trend. Many big and small companies are outsourcing some of their major functions to efficient service providers. Outsourcing is the strategic use of resources (or workers) outside the company to perform tasks that previously handled by internal staff. Outsourcing has become routine part of operations in certain industries, and a lot of companies benefit from outsourcing their services. Here’s why companies choose to outsource.

 

Better industry focus

Companies can focus on their core businesses when they outsource. Many companies fail because their workers are distracted from improving main products and services by administrative tasks. By outsourcing services (e.g. IT, accounting, sales, recruitment), companies can leave the job to the specialists while they remain focused at work.

Cost-efficiency

Outsourcing is cost-efficient because companies will only have to pay the service provider as they do work. Having in-house staff members can be expensive, as they will have to be paid even if there’s not much work to do.

 

Outsourcing-Solution

Specialized services

Outsourcing agencies specialize in what they have to offer. They can can handle complicated services without disrupting the host company’s operations.
Eddie O’Brien is a certified public accountant, currently serving as the CEO of the Americas at Arvato Bertelsmann. Visit this page to learn more about his professional work and other similar reads.

Advertisements
Off The Plate: Reasons Companies Outsource Services

Outsourcing: Increasing a Business’ Efficiency

Outsourcing is defined as sending job functions to an outside party instead of completing them internally. When a company is unable to manage everyday transactions efficiently or reach the target quota, it might be helpful to consider outsourcing.

     Image source: scutwork.com.au

In 2011, the United States Commerce Department reported that approximately 31 million U.S. employees of multinational companies work abroad. This number continues to rise as the fastest growing markets are outside the U.S.

Companies resort to outsourcing primarily as a cost-cutting measure, but it has advantages that go beyond this. A study conducted by Bain & Co. reports that the leading companies (out of the 2,000 companies that they have studied) use outsourcing in more strategic and innovative ways compared to the companies that do not have sustained and profitable growth.

Eighty-five percent of the leading companies utilize capability sourcing, outsourcing, and offshoring to improve client satisfaction, hone world-class talent, and bring fresh ideas and new products to the market faster for a thriving business.

Insufficient talent can be one of the factors that impede an emerging market’s growth. One way to solve the shortage is tapping into global talent. Aside from saving costs, this will cultivate fresh and skillful employees that can deliver positive results for the business.

Tapping global talent also widens market opportunities. A brilliant demonstration of this is AstraZeneca’s offshoring partnership with Chinese companies and universities, which eventually made it the largest pharmaceutical multinational firm in the industry of Chinese prescription drugs.

           Image source: topnews.in

External collaboration can also lead to faster production, which subsequently increases revenue, especially among companies with in-demand products and services. Handing off work to the right set of people will also help in-house employees devote their time on strengthening the companies’ core competencies by setting and achieving new goals.

Read more about BPO services by subscribing to this Edmund O’Brien blog.

Outsourcing: Increasing a Business’ Efficiency