What is Outsourcing | Outsourcing Examples & Benefits

Another world for 'outsourcing' is 'sub-contracting', which is a much more familiar concept to business owners. For example, how many businesses outsource ... Home | OffshoreOutsourcingPhilippines | WhatIsOutsourcingAndWhatDoesThisMeanToYourBusiness? | WhatIsOutsourcingAndWhatDoesThisMeanToYourBusiness? PreviousNext Whatisoutsourcingandwhatarethebenefitsofoutsourcingforyourbusiness?Canthisstrategyreallyhelpyourbusinesstocutcosts,whilstatthesametimehelpgrowyourbusinessandincreaseyourprofits? Manybusinessownersareunsureaboutoutsourcingandveerawayfromintegratingthisstrategyintotheoperatingstructureoftheircompany.Thisisashamehowever,becausethebenefitsofoutsourcingcanbequiteprofoundforbothsmallandlargebusinesses. TheBPOindustry(businessprocessoutsourcing)isfastbecomingaboomingindustry,butwhatexactlyisthedrawcardandistherereallyapositivepayoffforbusinessowners,iftheyembracethisstrategywithintheircompany? Therapidgrowthinoutsourcingcompanies Intoday’srapidlymovingmarketplacewhereeverydollarcounts,businessowners,nowmorethanever,needtokeepatightreinontheirbudgets.Everyadditionalemployeecanexertahugedrainonacompany’sbudgetandresources,soanycost-cuttingstrategies,whichalsohelptoimproveabusiness’soutputislikeapanaceafromheaven. Outsourcingisoneofthesestrategiesthathelpsabusinesstocutcostsandimprovetheirbottomline,becauseitallowsanorganisationtofulfiltheirobligationstotheiremployeesandtotheirclients,whilstatthesametime,keepingtheiroverheadsundertightcontrol. Thisstrategyhasthepotentialtofreeupvaluabletimewithinacompany,sothatmoreemphasiscanbeplacedoncreatingstrategiesnotonlyforfuturegrowth,butalsotohelpexpansionintoareasoutsideoftheirexpertise. Currentresearchindicatesthattheglobaloutsourcingmarkethasgrownrapidlysincetheyear2000andisexpectedtocontinuetogrow,wellintothefuture.Infact,globalrevenuepaidtooutsourcingcompaniesin2000was$45billion,butby2014thishadmorethandoubledto$104.6billion–aclearindicationthatorganisationsareembracingthisuniquemethodofmanagingtheirbusinessoperationswithgusto. SowhatisoutsourcingandcanyourbusinessreallybenefitfromtheBPOindustry? Whatisoutsourcing? Outsourcinghashadanumberofnegativeconnotationssurroundingit,particularlyoverthepasttenortwentyyears,butrecentlythisstrategyhasbecomemuchmorepopularandmainstreaminthebusinessworld.Entrepreneursinparticular,havetakentooutsourcingwithrelish,asitallowsthemtoliterallybeaone-man(orwoman)businessandtogrowtheirbusinessusingoutsideexpertise,onanas-neededbasis. Thewholepointofoutsourcingistobringinoutsidespecialiststotakeoverfunctionsthatwouldotherwisebeperformedbyemployees(ornotperformedatall,duetoalackofexpertisewithinthecompany).ThisBPOsolutionshasrisentothechallengeandhasmadehugeinroadsinhelpingbusinessestomeettheirobligations,whilstcreatingaverylucrativenichemarketforthemselves. Whenyoureallythinkaboutit,outsourcingisnotanewconceptandhasinfact,beenusedformanyyears,itisjustthatithasneverbeenconsideredtobe‘outsourcing’. OutsourcingExamples Anotherworldfor‘outsourcing’is‘sub-contracting’,whichisamuchmorefamiliarconcepttobusinessowners.Forexample,howmanybusinessesoutsourcetransportprocessestodelivertheirgoodsfromthemanufacturingplanttoaretailstoreorawarehouse(alsoknownaswarehouseoutsourcing)?Howmanybusinessesalreadyengageanoutsideaccountant,taxexpert,webdesigner,ITmanagementcompanyorsolicitorfortheircompany? Manycompaniesnowoutsourcetheirsocialmediamanagement,searchengineoptimisation,graphicsandothermultimediadesigns,digitalmarketingneedsandevenemailsupportandadministrativeservices. Themajorityofbusinessownerswouldneverconsideractuallyemployingtheseexpertsfulltimeontheirstaff,theysimplyoutsourceorsubcontractthework–withoutrealisingthattheyarealreadyusing,whatareinreality,outsourcingcompanies. So,ifyouneedadefinitionofoutsourcing,itcanbeconsideredtobewhereanorganisationusesanexternalcompanytohandleworknormallyperformedbyemployeeswithinthatcompany. Someotherexamplesofverysuccessfulbusinessactivities,whicharefrequentlyoutsourced,includepayrolls,accountingservices,stafftraining,technicalsupport,customersupport,callcentres,procurements,manufacturing,supplychains,recruitment,computerprogramming,researchanddevelopment,dataentry,humanresourcesandevencreativedesign. Withanunderstandingofhowacompanycaneasilyintegrateoutsourcingintoabusinessstructure,oneoftheobviousbenefitsofoutsourcingisclearlyincuttingcosts.Therearehowever,anumberofothersignificantbenefitstousingthisapproachwithinanyorganisation. Benefitsofoutsourcingforbusinessesin2020 Allorganisationsaredifferent,buteachwillhaveacoresetofbusinessactivitiesthatareverysimilar,regardlessoftheirindustry,butwillalsohavemanyactivitiesthatareveryspecifictotheirownbusinessorindustry. Outsourcinggivesacompanytheabilitytokeepatightreinontheiroverheads,whilstatthesametimeexpandingandgrowingtheirbusiness–notonlyintheircoreservicesorproducts,butalsointocomplimentaryareasornewandemergingmarkets. Soingeneral,therearesixrealworldbenefitsofoutsourcing,inthebusinessworld: •Toreducecapitalcosts:Byreleasingfundsthatwouldotherwisebeallocatedtostaffwages,youcanturnfixedcostsintovariablecosts.Thisprovidesbusinesseswithahugeopportunitytoreallocatethesefundstootherareasoftheirbusiness,suchasrevenueproducingactivities,whichpreviouslywereoutofreach. Manynewstart-upbusinessesandentrepreneursactuallydesigntheiroperatingstructurearoundoutsourcing.Thisnovelapproachavoidsthelargecapitalexpendituresneededintheearlystagesofcreatingabusinessandallowsmanynewbusinessestogetofftheground,businesses,whichpreviouslywouldhavebeenimpossibleunlesstherewasaninjectionofconsiderablefunds. Whenyoucoupleoutsourcingofbusinessactivitieswiththerapidgrowthincloudtechnology,youcanunderstandhowmanynewstart-upcompaniescanliterallybeupandrunningwithlittlecapitalexpenditure.Alongwithcloudtechnology,theBPOindustryhasvirtuallycreatedanewplatformforbusinessgrowth. •Reducedlabourcosts:Toreducecosts,manybusinesseslayoffstaff,whichhastheaddedcomplicationofreducingoutputandprofitsevenfurther.Thepointisthatsubcontractingselectbusinessactivitiestooutsourcingcompanies,whilstreducingfundsspentonfull-timehumanresources,alsoenablesbusinessestonotonlymeettheirobligations,buttoalsoexpandtheiroperations. Outsourcingalsohastheaddedbenefitofenablingacompanytoengageintheservicesofawiderangeofexpertise,withouttheadditionalcostsoffundingapermanent,high-levelsalary.Inaddition,weallrealisethatbusinessactivitiesebbandflow,meaningthatstaffcanmovefromhavinglittleworkontheirhandsoneday,tobeingoverwhelmedthenext. Theabilitytooutsourceworkinbusytimesortoengagespecialistsasneeded,providesabusinesswiththeflexibilitytorampupoutputinbusytimes,suchasduringholidayseasonsortotakeonnewprojects,allofwhichhavealimitedtimeframe,withouttyingupfundsandresources. •Increasedefficiency:Whenworkisoutsourced,staffcanfocusontheirownworkloadswithoutbeingstressedaboutthemountainofworkbuildinguporhavingtotakeonadditionalroles,forwhichtheyarelittlepreparedandunder-skilled. Stafftherefore,arelessstressedandcanworkmoreefficientlyattheirownjobsandrefocustheireffortsoncorebusinessactivities.Thesavingsmade,duetoincreasedworkloadefficiencies,caneitherbepassedontocustomersorreallocatedintootherareasofthebusiness. •Engageexperthelp:Employingtheskillsofprofessionalsorspecialists,onapermanentbasis,caneatalargeholeinacompany’sbudget.Theabilitytooutsourcecomplexactivitiesorservicesthatneedtobeperformedbyexpertstooutsourcingcompanies,allowsabusinesstoupselltheirownservicestoclientsortoexplorenewandemergingmarkets. Forexample,acompanycouldengageanITspecialistwhoisexperiencedincodingtocreateafreeappthathelpscustomerstousetheirproductsmoreeasilyorcomplementsahighendproduct.Thistypeofworkisjustaone-timeeventandlendsitselfwelltotheBPOindustry. •Gainacompetitiveedge:Reducingcosts,refocusingoncorebusinessactivitiesandbeingabletomeetthemarketwhendemandishigh,allhelptogivebusinessesanedgeoverthecompetition.Organisationscanpositionthemselvesforfuturegrowthmuchmoreeasily,whentheiroverheadsareminimizedandtheyhaveaccesstothenecessaryexpertisewhenneeded Smallbusinessesinparticular,cangainamuchneededstepupbyoutsourcing,enablingthemtoofferthesameservicesorproductsaslargercompetitors,butatafractionofthecost. Withallofthesereal-worldbenefitsthatcomefromoutsourcingawiderangeofbusinessactivitiestoexternalbusinesscontractors,ownersandmanagersrapidlymovefromasking‘whatisoutsourcing’to‘howIcancapitaliseontheBPOindustryinmycompany?’ Itisfairtosaythatoutsourcingcompaniesarenowpartofanestablishedandgrowing,globalBPOindustry.However,beforehiringanyindividualorcompanyonapermanentorlimitedbasis,aswithanybusinessactivity,italwayspaystodoyourownresearchandduediligence. Thetakehomemessageconcerningthebenefitsofoutsourcingforbusinessesin2015isthatthisstrategyincreasestheabilityofabusinesstoinvestigatenewopportunities,whilstkeepingcostscontained.Itopensupawholenewworldforbusinessowners,managersandentrepreneurstoexplore. HireDedicatedOffshoreStaffandsaveupto75%comparedtohiringlocally. × Byclickingonthe"Submit"buttonIherebyallowOutsourcedQualityAssuredServices,Inc.("Outsourced")tostoreandcollectmypersonalinformationforthepurposesofthisinquiry.Assuch,IagreeandauthorizeOutsourcedtocollect,store,orcontinuetousemypersonalinformationfortheabove-statedpurpose,andtoretainmypersonalinformationforaperiodofnotmorethanone(1)year,andforthesepurposesonly. AboutOutsourced Watchourvideo RecentPosts AllyouneedtoknowaboutoutsourcinginboundandoutboundcallcenterservicesinthePhilippines Outsourcingforaccountantsisapracticalandcosteffectivestrategy VirtualAssistantforMarketing:WhyYourBusinessNeedsIt OutsourcingStatistics–TopReasonsWhyBusinessesHireRemoteStaff Hiringavirtualassistantforwebsitedevelopment&support Categories BusinessProcessOutsourcing CallCenterServices CreativeOutsourcing DigitalMarketing ITOutsourcingPhilippines ITBPO News OffshoreOutsourcingPhilippines OutsourceSEOToThePhilippines OutsourcingStaff OutsourcingtothePhilippines PhilippinesBusinessProcessOutsourcing PhilippinesOffshoreStaffing QualityAssurance RemoteStaffPhilippines StaffLeasingPhilippines WebDevelopersPhilippines Happyclienttestimonials Extremelyprofessional "Outsourcedareanextremelyprofessionalorganisation,easytotodobusinesswithandlighteningfastatsortingthingsout.Thestaffaresuperfriendlywitha'cando'attitude.Theyalsotreatourteamverywellandwehavenocomplaints(happyproductivestaffmeansahappyclient)." Extensionofourcompany "Wehavebeensohappywiththepeopletheyhavebroughtonboardwehavedecidetoexpandtheoperation.ThisistestamenttotheflexibilityanddeterminationoftheOutsourcedteamwhohavebeenmorelikeanextensionofourcompanyratherthana3rdparty." Incrediblyhelpful "Outsourcedhavebeenanenormoussupportandverypatientasweprogressdowntheoutsourcingpath.TheyhaveintegratedperfectlyintoourteamandwithallinteractionswithOutsourcedstaffwehavefoundthemtobeincrediblyhelpfulandaccommodating." Highquality "IwanttostressthatwehavegreatlyappreciatedtheservicesofOutsourced,theservicehasbeenexemplaryandtheworkhighquality;thestaffhavebeenapleasuretoworkwith.WewouldliketoretainanongoingrelationshipwithOutsourced."