Outsourcing services can be an indispensable business development process in 2017. Global outsourcing is estimated to have grown into a $548.5 billion industry in 2016. Outsourcing has 3 specific services:
1. Logistics: sourcing and distribution
2. Information technology – software development, network management
3. Business processes – call centers, financial services, resource processes
Several studies have been conducted to confirm the effectiveness of outsourcing as a process improvement measure. Take a look at these statistics:
– 53% of marketing directors want to outsource marketing.
– 78% of small businesses believe outsourcing will help drive growth compared to larger competitors.
– 27% use outsourcing to reduce costs.
– 90% of businesses believe that outsourcing is important to achieve growth.
Outsourcing will increase productivity a hundred times.
These numbers provide strong evidence of the six reasons why companies outsource services.
Streamline business costs
– Cost reduction remains the number one reason why companies adjust their outsourcing strategies. There are two clear cut reasons why outsourcing reduces business costs:
Comparative cost advantage
– Labor in remote locations such as the Philippines, India and China is significantly lower. By comparison, average wages in the US, UK, Canada and Australia range from US$16 to US$20 per hour.
In the Philippines, the average salary for an outsourcing agent is US$2.20 per hour. On a cost-per-hour basis, assuming managed labor between 20% and 30% of gross income, cost-per-hour in the Philippines should be between $8 and $11.
Economies of scale
– Outsourcing service providers operate on the principle of economies of scale. It allows them to provide customers with greater value while staying within their profit margins.
– If you start outsourcing with just 10 seats, service providers are willing to negotiate their prices when you expand to 20 seats. It effectively reduces your overall costs per hour and improves your operating profits.
Access to experienced professionals
When you outsource services, you are not signing a contract with a new graduate. Third-party outsourcing companies are managed by people who have accumulated extensive experience in various industries.
A typical organization set up includes the following designations:
– Project management
– IT management
– Workforce management
– Training management
– Quality management officer
Outsourcing helps you save time and training costs. Outsourcing companies take care of training and orientation.
While cost savings remain a top priority when outsourcing, many companies are looking to take advantage of talent availability.
In one study, it was revealed that 36% of companies that outsourced did so to partner with known innovators in their industry. Meanwhile, 37% outsource to improve and develop their own capabilities within the industry.
Companies that outsource services can increase productivity almost immediately. There are 3 reasons for this:
– By delegating non-essential and specialized functions, you can focus your time, money and other resources on the core functions of your business.
– Outsourcing companies are constantly evaluated based on their productivity. They will work to consistently meet or exceed established benchmarks.
– Cost savings generated by outsourcing can be used to fund your other revenue-generating projects.
One of the most popular outsourced services is customer support. Many companies outsource customer support because of the higher cost of maintaining an in-house team. You need to hire agents to cover different customer support channels:
Therefore, outsourcing agents can engage customers through high-touch communication channels. He or she is on the front lines of customer support and can extract information from your end users.
The data collected will provide you with the bases to improve the quality of your products and services.
ACCESS TO THE LATEST AND MOST UPDATED TECHNOLOGIES
Global outsourcing actually originated in India as IT companies from Silicon Valley sought expertise in software development. The process not only saves money but also improves the final product.
India leads the global outsourcing industry when it comes to IT. Companies continue to look for IT companies in India to help them develop technology. Companies can use the latest technologies that are also very affordable.
Technology exists to make life and business more efficient and greater efficiency leads to greater cost savings.
OPEN THE DOOR TO GREAT TALENT
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