Benefits of outsourcing your business processes

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Photo credit: Depositphotos

Everything has an upside and a downside, outsourcing is no exception. Good news is the advantages outweigh the disadvantages. Below is a look at some of them.
1. Reduced expenditure.
The most obvious and immediate advantage is cost-cutting. Outsourcing eliminates the need to hire in-house employees (no recruitment cost) and train them thereby freeing up your cash flow that can then be invested somewhere else. A company is now able to inject the money into other revenue-generating activities. Given that the third-party vendor is an expert in their field you don’t have to worry about the quality of service provided being compromised because it’s coming at a cheaper cost. Financial resources can now be directed towards the vital human resources. Plus it’s not always a guarantee that temporary staff will live up to your expectations.
Outsourcing means that the need to invest in infrastructure is eliminated as it is now the vendor’s responsibility to provide the services. This means that the service provider is tasked with developing and maintaining the infrastructure needed.
With the rapid growth of business the need for more office space is almost inherent. Outsourcing some of the non-core functions will eliminate the need for a bigger office space saving a company expansion expenditure.
2. Increases efficiency.
Armed with years of experience in their fields of knowledge third-party vendors are in a better position to deliver intricate outsourcing projects without breaking a sweat. In turn this results in increased efficiency and output as outsourcing vendors can do the job better with their knowledge and understanding of the domain. This leads to an increase in productivity and efficiency in the process thereby contributing to the company’s bottom-line.
Based on the fact that outsourcing is premised on the understanding (read contractual agreement) between a business and a service provider the business can expect nothing less than excellent service. Kevin Grauman, RoundPegg’s CEO, in a CPA Journal stated, “Paying for a business service creates the expectation of performance.” In other words it creates accountability after all the service provider wants repeat customers.
3. Allows focus on core functions.
Outsourcing of business processes means that a company will be able to focus on core processes as opposed to supporting ones. It will be able to put more support on these core functions.
When in-house employees are tasked with providing these services it’s likely that any increase in the back-office operations will result in the drop of the quality of core functions. This is due to the fact that the increase in the back-office operations requires additional resources human and/or financial. Outsourcing allows a company to concentrate on the core functions without comprising the back-office operations. This is especially vital and helpful for start-ups.
4. Increases in-house efficiency.
Sometimes a new project may require a company to undertake a task that its staff is not skilled to perform. Outsourcing the service will then serve to bring in a third party with the required skills. These third party experts will work alongside the in-house employees and somewhere along the way the in-house employees end up acquiring new skills. In such a scenario outsourcing can be used as a way of gaining access to new skill sets and outside expertise. This is beneficial especially to start-ups that are strapped of cash and not able to hire in-house specialists.
5. Access to skilled expertise.
Third-party vendors to whom businesses outsource to employ skills that have been perfected over year of practice. Chances are they will provide a much better service than the in-house team whom the area might not be in their core competency zone. Their highly polished skills result from the fact that they have practiced on their respective areas of specialization and thus better equipped.
6. Round the clock operation.
A majority of BPO service providers tend to work 24 hours a day seven hours a week. This means that companies can get their jobs done even when they are off the clock including weekends and holidays. This can be performed even by local vendors unlike the belief that only offshore outsourcing companies can do that due to the time zone difference. This is because most outsourcing companies tend to work 24/7 on a shift basis. An example being Adept Technologies Ltd in Kenya that operates 24/7. This results in an increase in a company’s overall productivity.
7. Risk sharing and management.
Risks present themselves in different forms such as changes in government regulations, changes in economies and changes in technology etc. Considering the fact that every business faces some level of risk associated with its business, determining the outcome of a new undertaking is a very vital aspect for a company. Outsourcing business processes enables a company to allocate a number of specifies responsibilities to outsourcing vendor allowing the company to share some of the risks with the vendor.
In the event that a company is experiencing high employee turnover the operations of a company are usually negatively affected. With that in mind should a company have outsourced some of its business operations the outsourcing will provide continuity. Also the outsourcing vendors take the responsibility to manage and mitigate these risks on a company’s behalf. Since they are experts in their various sectors chances are they will be better at it than a company’s in-house staff.
8. Staffing flexibility.
Outsourcing renders companies flexible to change. Some business processes have seasonal demand, some high seasons and low seasons. Outsourcing will allow a company to run its business consistently through the high and low seasons. A company can hire the services when they are in demand and release them when they are not. Having to hire in-house employees would mean keeping your staff and paying them even when the services are in low demand.
9. Start new projects quickly.
When dealing with in-house employees a company would have to plan for months when undertaking a new project. This is because they might need might to recruit and train new employees, put in place infrastructure and acquire the needed technology for the new project. Turning to outsourcing gives the company the opportunity to start the project immediately since the outsourcing vendor is most likely prepared to undertake new projects in their respective areas of expertise.
10. Level the playing field
A majority of the start-ups are unable to compete with the larger companies’ in-house support mostly due to limited funds. By outsourcing they are able to access the same level of efficiency and expertise that the bigger companies have.
The ultimate gain of outsourcing is enabling a company to gain a competitive advantage in the industry. A company needs to evaluate the pros and cons of outsourcing before embarking on the journey and when done correctly the company will definitely surpass its competitors and save time and money doing it.

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