Outsourcing has emerged as a major trend in almost all industries over the past decade. Many companies, large or small, are turning to business process outsourcing services to expand and improve their productivity while controlling payroll and overhead costs. Outsourcing helps businesses align with internal and external priorities and provide enhanced value to customers. Most companies that outsource are comfortable utilizing the expertise of reliable outsourcing vendors for many business activities. Outsourcing has significantly changed the way businesses work and is becoming the endpoint of market development in many companies. According to a 2016 Deloitte survey, the two most popular reasons for outsourcing were cost cutting (59%) and focusing on the organization’s core business.
Outsourcing helps a business to grow and provides the opportunity to stay ahead of its competitors. Here are some business sectors that can benefit from outsourcing:
- Retailers: From financing to planning, executing and monitoring sales and marketing campaigns, retailers deal with many tasks to stay competitive in the market. Retail companies include retailers with on-ground physical stores, internet/ecommerce retailers, catalog and mail order companies, grocery store chains, hypermarkets, luxury retailers, general merchandise stores, department stores, warehouse retailers, and so on. Most of the retail companies are now choosing to outsource their essential activities, including email marketing, social media engagement, customer support etc to achieve maximum efficiency in their business. Outsourcing provides distinct advantages for retailers including business growth, technology advantage and data security as well as ensure customer satisfaction.
- Home Businesses: Home businesses are usually small and often people think that outsourcing is not necessary for small home-based businesses. But outsourcing tasks like paperwork, field phone calls, scheduling and administrative tasks, payroll and invoicing helps to save time, money and resources. This also allows business employees to provide more focus on other activities in a business.
- Healthcare: The healthcare industry is always under pressure due to the constant demand from patients for superior patient care. Another stress-building issue is the strict regulations and standards implemented to ensure security of protected healthcare information and reach efficiency. So, healthcare units seek the assistance of outsourcing agencies to take care of their back office tasks such as accounting, customer service, payroll, IT and so on that are essential to healthcare service. This minimizes the risk of non-compliance because outsourcing companies are well-versed in the various regulations that are applicable, and helps avoid the time-consuming paths of studying legal and industry standards.
- Finance: In its 2016 survey, Deloitte revealed that the financial sector represents 27 percent of the outsourcing market. Just like the healthcare industry, the financial industry is also under tremendous pressure to meet the growing expectations of customers. These demands are driving changes in the way financial services are looking at outsourcing as a part of their strategies to address market changes. Today, the financial sector views outsourcing as a means of cutting costs and as a strategy that will help them achieve long-term business goals such as reducing capital investments in infrastructure and improved services.
- Large businesses that require customer care services: Large businesses like telecommunication companies require a lot of customer care activities and services. So it is better to partner with an external agency to handle all customers than having a customer care centre as a part of the company itself. This helps to save resources, money and time that can be invested in core parts of the business.
- Freight forwarding companies: Changing demands on a global level, high market competition, and federal and state regulations are among the challenges freight forwarding companies face. This is a sector that is data driven and entities in this sector outsource their IT requirements, data and document conversion needs as well as non-core functions such as payroll, accounts payable and accounts receivable.
Advantages of Outsourcing Business Processes
With access to the internet, apps and advanced websites, outsourcing has become seamless and quick. It assures quality work with quick turnaround time at minimum cost. Outsourcing to domestic service providers as well as off-shoring has advantages such as the following when you choose the right provider:
- Outsourcing provides the opportunity to work with a strong, skilled, and expert team that can come up innovative ideas and insights that will enable the company to move forward. Outsourcing allows you to expand your services and offerings by focusing more on core activities.
- Outsourcing to a good vendor lowers your capital cost and helps to save up to 60% of total costs. It also eliminates the need for setting up an in-house system which can be expensive. You also get to save on employee salaries and other labour-related expenses since the cost of living in countries where you outsource or offshore tend to be much lower. You save on recruitment costs as the vendor has access to the required expertise. The money saved can be invested elsewhere in the organization. You don’t have to worry about obligatory national insurance contribution, sick pay, benefits or other expenses that pile on top of a normal employee’s salary.
- It provides much more flexibility for businesses due to time zone difference.
- Outsourced solutions are provided using the latest technology and techniques. Quality output is delivered within quick turnaround time. You benefit from high quality service, you can manage business data in an efficient way and use your resources productively.
- Outsourcing offers access to talented and experienced professionals around the globe that helps small businesses to keep up with the professionalism of large firms.
- Minimizes the risk of work lags, insufficient customer engagement and communication and similar challenges. With the help of adjusted work shifts your outsourcing provider can ensure that all your business needs are met.
In a regular office there are a number of functions that can be outsourced such as customer service, application development, data entry, office management and much more. For any office, outsourcing data entry and other activities helps to improve efficiency and productivity. The key factors why organizations outsource their business processes are lack of expertise in certain business processes, availability of labour at affordable rates, and the ability to concentrate on core business activities. Expertise in communication, capabilities, technical expertise and affordable packages are the most important advantages of outsourcing. Professional providers of outsourcing solutions can undertake and complete all the entrusted tasks in a timely manner. They ensure the confidentiality of the data handled and take necessary steps to avoid any data breach. When considering outsourcing, study your processes, your team, and the tasks you have to do regularly. You can outsource those areas that are very challenging for your team. Make sure to evaluate the difference in costs between hiring a full-time staff in-house and outsourcing.