Why Is Outsourcing Important?

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Outsourcing is the recent buzz these days, as more and more businesses which are concerned about their quality and cost all over the world are reaching destinations like India for outsourcing their non-important business procedures. So, do you want to know what exactly outsourcing is and what are the basic advantages of having an offshore partner on your side to work for you?

While evaluating your decisions and choices in outsourcing among different components of your operations, you should consider different benefits of outsourcing. If it is done for many other reasons, outsourcing will help your company in saving their costs and additional expenses. Some of the advantages of outsourcing even which go beyond monetary benefits and are able to deliver lot more than this.

This articles focuses on the benefits of outsourcing which adds to the importance of outsourcing and increases its use in different organizations.

What is outsourcing?

Outsourcing refers to the way in which companies allows different business processes of functions to external vendors. Any type of business process can be done from the offshore location which can be further outsources. It includes many important functions such as payroll, transaction processing and inventory management to name. In addition to this, there are many call center services which are outsourced in the best possible manner. Most common outsourced processes these days include book keeping service, text and editing services, image manipulation services, transcription services, call center services, data conversion services, etc.

There are following type of solutions available for outsourcing these days:

Internal outsourcing

Internal outsourcing includes increasing your staff by hiring local labor. It includes hiring someone for junior position, part-time employee or assistant property manager. Main objective of internal outsourcing is hiring someone who can share the work load of current employees. Internal outsourcing is very common practice and for longer period of time it has been the only option available for tackling business growth.

Onshore outsourcing

In past few years, this type of outsourcing has become very common with the property managers by the use of third party app such as inspection manager, maintenance manager or live agent for routine tasks such as maintenance repairs, quotes or inspections.

Offshore outsourcing

Business process outsourcing (BPO) is new territory for the management of property and real estate industry. Many famous companies Optus, Telstra and Foxtel have been outsourcing for years.

Benefits of outsourcing

All of these outsourcing solutions provides either long-term or short-term relief from the tasks which must be accomplished on regular basis.

Cost benefits

Outsourcing is the best option when you have many back-office functions that are complicated in nature, but if your company’s size is stopping you from performing all these functions at reasonable and consistent cost then outsourcing can be a good option for you. The most visible and obvious benefit which is related to saving costs with the help of outsourcing. You can get your job done at affordable rate and high quality with the help of outsourcing. Like there is a huge difference among wages in Asia and western countries, they can get their work outsourced from Asian countries to save their costs. In addition to this, quality of their services is also very high by making sure that low-cost does not mean low quality.

Increased focus on major activities

During period of rapid growth, back-office operations of company will expand automatically. This expansion calls for hiring some reliable resources at the core activities expense which helps in making a company successful. If you are going to outsource these activities, it will make it easier for you to focus on major activities of your company which requires more attention without compromising service or quality in back-office.

Reduced over-head costs

Mostly, the overhead costs of back-office function are very high and it is believed that if they are outsourced all these functions can run in a smooth manner. Like outsourcing some simple operations for the reduction of need for more office space.

Controlling operation costs

Operations whose costs are running out of control must be considered for the outsourcing process. Many departments have evolved over a period of time into the poorly managed and uncontrolled areas which encourages the outsourcing process. Moreover, the outsourcing firm can help in bringing improved management skills to your firm that that could be available otherwise.

Staffing Flexibility

Outsourcing helps in operations that have increased cyclical and seasonal demand for bringing the additional resources whenever you need and release them. You should outsource your business with some reliable partner, as the experienced outsourcing companies bring their expertise and practices in delivering complicated outsourcing projects. But they can do their job in the better way with their understanding and knowledge of domain. It causes an increase in productivity and efficiency in the process which contributes to bottom-line of your own company.

Risk and continuity management

The time period of increased employee’s turnover will help in adding to the inconsistency and uncertainty to different operations. Outsourcing helps in the provision of continuity level to company which reduces the substandard risk.

Development of Internal Staff

A larger project requires skills that are not possessed by your staff. The on-site project outsourcing helps in bringing people with the required skills for your company. The employees of your company can work with them for gaining set of new skills.

Outsourcing helps in filling the gap for expert labor in some of the important portions of business processes and availability of cheaper labor and not compromising on output quality as well. Most important skills required for outsourcing include communication capabilities, suitable financial packages and technical expertise.


All you need to know about outsourcing

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Outsourcing is the complete process of utilizing important services from the companies outside the country which are performed within a firm and which is a common concept to entrepreneurs too. There are many companies which works for outsourcing of their payroll, distribution, accounting and many other significant functions, mostly because they don’t have any other option left. There are many large companies or organizations which outsource business functions for cutting extra costs. There is an increased trend of outsourcing these days which is the reason why most of the companies are evolving for the fulfillment of the outsourcing business needs.

Outsourcing has completely revolutionized the business processes these days for cutting additional expenses. In the beginning, outsourcing was only limited to functions that are low risk such as data entry and payroll processing. Later on customer operations were started out getting outsourced on larger scale.

There are many global companies who wanted to utilize the cost benefits of outsourcing and all high-end functions related to it like healthcare BPO, IT services and also research services for reliable companies for which they outsource business process. It has become a significant part for both the large and small business companies who devote them to outsourcing and business operations to some of the specialized vendors.

Reasons of outsourcing business processes

Major factors which causes increase in the growing trend of outsourcing include following:

  • Easy availability of cheaper labor, which does not compromise on output quality.
  • Feasibility and ability for concentrating on the business processes.
  • Absence of skilled labor in some parts of the business processes.

All of the above mentioned factors contributes to the outsourced partners across various locations in world. The expertise in communication capabilities, technical expertise and effective financial packages in different locations in the world.

Advantages of outsourcing

Not every business understands the advantages of outsourcing. Outsourcing can save lot of money, but it is helpful in also many other aspects. Due to the flat economy in many countries, they outsource business solutions and huge layoffs were kept in-house. Outsourcing can provide countless advantages to businesses:

Controlling capital costs

Companies that do everything independently conduct lot of research on various aspects such as distribution and marketing expenses which passes in to their customers in future. Competitive advantage can be gained with the help of economy of scale and cost structure which supports the business operations of your firm.

Decreases labor costs

It can be quite expensive to hire and train staff for peripheral projects or short-term and temporary employees also don’t work so hard and never live up to the expectations. Outsourcing helps in focusing on your current human resources when you need them most.

New projects quickly

A reliable firm has all the resources for starting a new project immediately. Handling similar project in-house requires months or week for recruiting and hiring right people, training them and providing them all the support that is required by them. If a project requires significant capital investments, the startup process can become extremely difficult.

Focus on core business

Each and every business has some limited resources and every manager has limited amount of attention and time to outsource business solutions. Outsourcing helps your business in shifting its main emphasis from peripheral activities to some significant work that is helpful for serving customers. It also helps managers in setting out their goals.

There are many firms which cannot afford to match in accordance with the support services provided by in house team that is further maintained by larger organizations. Outsourcing is also helpful for the smaller firms which act big by providing them access to similar economies of efficiency, scale and expertise that is enjoyed by the larger organizations.

It is understood that business investments require larger amount of risk. Competition, markets, financial conditions, government regulations and technologies transform quickly. The outsourcing providers manage and assume this risk for you because they are at good at making decisions regarding business risks in special expertise area.

Disadvantages of outsourcing

Loss of confidentiality

If an organization outsources HR services, it carries the risk of the loss of confidentiality. Thus, it is important to keep a check in its place for avoiding loss of confidential data.

Managing business control

Losing the management control of business functions means you don’t have any control over business activities that are outsourced. Sometimes it is easy to conduct these processes inside an organization rather than with any other outsourced partner.

Quality issues

Many important issues can arise if the providers of outsourcings do not have proper processes and you are not experienced for working in an outsourcing relationship.

Hidden costs

There are many hidden costs linked with outsourcing processes that are involved in signing a contract and in a similar manner outsourcing from outside the countries can pose a serious threat.

Lack of customer emphasis

The outsourcing vendor always caters to the need of many different organizations at time. During these situations vendors lack complete emphasis on organization tasks.

Future trends for outsourcing

  • Outsourcing relationships have become more standardized and they have become more people and process driven rather than rates and prices.
  • The increasing cost pressures will also create ways for the outsourcing contract which act in a flexible manner.
  • Newly established businesses will observe higher outsourcing adoption for the reduction of operational in efficiencies and increasing their time to market.
  • The increasing costs of raw material, oil and transportation costs will make it very important for most of the companies to have a look at outsourcing for keeping their costs at extremely low level.
  • More high-end critical business functions are expected to be outsourced in the upcoming time.

Outsourcing will continue to survive in upcoming time as well as it provides complete access to the specialized skills and saves on effort and time, which can be further utilized into business ventures.