The Top 10 Reasons To Outsource

Outsourcing is the process of delegating a company’s business process to third parties or external agencies, leveraging benefits ranging from low cost labor, improved quality to product and service innovation. When outsourcing transgresses national boundaries and is managed by companies located in other countries, outsourcing takes the form of offshoring.

A hotly debated topic with pros and cons, both outsourcing as well as offshoring have a direct impact on a company’s top and bottom line and have become key components of defining how successful enterprises are run. Given below, as reflected by companies, are the top 10 reasons to outsource:

1.       Lower operational and labor costs are among the primary reasons why companies choose to outsource. When properly executed it has a defining impact on a company’s revenue recognition and can deliver significant savings.

2.       Companies also choose to outsource or offshore so that they may continue focusing on their core business processes while delegating mundane time consuming processes to external agencies.

3.       Outsourcing and offshoring also enable companies to tap in to and leverage a global knowledge base, having access to world class capabilities.

4.       Freeing up internal resources that could be put in to effective use for other purposes is also one of the primary benefits realized when companies outsource or offshore.

5.       Many times stranded with internal resource crunches, many world class enterprises outsource to gain access to resources not available internally.

6.       Outsourcing, many a time is undertaken to save costs and provide a buffer capital fund to companies that could be leveraged in a manner that best profits the company.

7.       By delegating responsibilities to external agencies companies can wash their hands off functions that are difficult to manage and control while still realizing their benefits.

8.       Outsourcing andespecially offshoring helps companies mitigate risk and is also among the primary reasons embarked upon.

9.       Outsourcing also enables companies to realize the benefits of re-engineering.

10.   Some companies also outsource to help them expand and gain access to new market areas, by taking the point of production or service delivery closer to their end users.

Benefits of Outsourcing

Outsourcing as an idea is not novice; it has been for over a thousand years now, the only difference being that it's gaining lot more popularity since a decade for whatever reasons. Outsourcing basically means asking a third-party vendor to work for you on a contractual basis. Companies outsourceprimarily to cut costs. But today, it is not only about cutting cost but also about reaping the benefits of strategic outsourcing such as accessing skilled expertise, reducing overhead, flexible staffing, and increasing efficiency, reducing turnaround time and eventually generating more profit.

Here are the top ten benefits of outsourcing:

1.       Get access to skilled expertise

2.       Focus on core activities

3.       Better Risk Management

4.       Increasing in-house efficiency

5.       Run your business 24X7

6.       Staffing Flexibility

7.       Improve service and delight the customer

8.       Cut costs and save BIG!

9.       Give your business a competitive edge

10.   See an overall increase in your business

What is Outsourcing

Outsourcing is the act of one company contracting with another company to provide services that might otherwise be performed by in-house employees. Often the tasks that are outsourced could be performed by the company itself, but in many cases there are financial advantages that come from outsourcing. Many large companies now outsource jobs such as call center services, e-mail services, and payroll. These jobs are handled by separate companies that specialize in each service, and are often located overseas.

Reasons to Outsource:-

There are many reasons that companies outsource various jobs, but the most prominent advantage seems to be the fact that it often saves money. Many of the companies that provide outsourcing services are able to do the work for considerably less money, as they don't have to provide benefits to their workers and have fewer overhead expenses to worry about. Depending on location, it may also be more affordable to outsource to companies located in different countries.

Outsourcing also allows companies to focus on other business issues while having the details taken care of by outside experts. This means that a large amount of resources and attention, which might fall on the shoulders of management professionals, can be used for more important, broader issues within the company. The specialized company that handles the outsourced work is often streamlined, and often has world-class capabilities and access to new technology that a company couldn't afford to buy on their own. Plus, if a company is looking to expand, outsourcing is a cost-effective way to start building foundations in other countries.

Possible Disadvantages:-

There are some drawbacks to outsourcing as well. One of these is that it often eliminates direct communication between a company and its clients. This may prevent a company from building solid relationships with their customers, and often leads to dissatisfaction on one or both sides. There is also the danger of not being able to control some aspects of the company, as outsourcing may lead to delayed communications and project implementation. Any sensitive information is more vulnerable, and a company may become very dependent upon its outsource providers, which could lead to problems should the outsource provider back out on their contract suddenly.