An increasing number of small- to large-sized businesses are relying upon outsourcing solutions to meet organizational goals while facing tough economic conditions. They are an economical approach to making operations more streamlined. Outsourcing is still increasing in popularity, particularly because the world-wide economic downturn has prompted organizations to seek alternate ways of decreasing expenditures. Additionally, the advent of outsourcing has provided companies with solutions that their in-house departments couldn’t render.
The history of outsourcing
Outsourcing is normally associated with the information technology (IT) sector, but its history can be traced to the manufacturing sector. This sector realized that it was practical to build production facilities in places where the source materials could be obtained to save on lead time and shipping costs. In the 80′s, U.S. corporations outsourced manufacturing to Canada, Brazil, and Mexico. IT outsourcing overtook manufacturing outsourcing a decade later.
Countries such as India improved their technology infrastructure considerably, paving the way for some of the first international call centres. It started with client and after-sale support, but it quickly expanded to medical, media, and legal transcription services. Currently, Business Process Outsourcing (BPO) agencies are worth billions. Nations such as China, the Philippines, and India are continuously expanding their services to accommodate the demand for these options.
Outsourcing services present a multitude of benefits for big and small companies alike. The key benefits of lower operating and capital investment expenses can never be stressed enough. Firms can lower their expenses when they retain the services of an agent who specializes in a certain task because that activity is accomplished more efficiently.
By hiring an outsourcing provider to perform specific activities, the host organization can focus on its key functions. In effect, your staff can focus on their assigned duties better. The company can also focus on key sales and production objectives, leaving technical and supplementary services to a specialist. Outsourcing can offer increased flexibility, since the host organization does not need to take on all business processes. The company can place emphasis on areas of their business which can increase their competitive edge in the marketplace. The host firm may even provide superior products or services at a lower price due to reduced over-all operating costs.
Where are the cost savings?
For small companies, exploiting outsourcing options can be beneficial because the business can share its activities. Large companies can typically afford to handle all operations in-house, but for smaller businesses, it may be more cost-effective to contract out particular operations. The workspace, equipment, and furniture necessary to house a single work team can be considerable. The capital cost, insurance coverage, depreciation together with the human resources expenses of employing staff can be staggering. In contrast, the host company is not obligated to the outsourcing provider when the latter’s services are no longer required.
Outsourcing organizations are retained for cost-saving benefits and selecting the wrong one could actually increase expenses as well as lower the service quality, therefore defeating its purpose. When considering outsourcing solutions, a business should determine which services are required. Many businesses boast of wide-ranging expertise and unbeatable pricing. But the truth is, these agencies need to be credible. It is therefore, critical to do a comprehensive background check on potential candidates that includes previous and current customers, technology used, training techniques, and staff turnover rates. While it might be tempting to select the provider with the lowest rates, keep in mind that you often get what you pay for.
Mr. Mcbride enjoys covering international market trends. He’s always been fascinated with the impact of eastern countries on western world market practices.
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