Why Outsourcing Makes Complete Sense for Businesses

Outsourcing is a practical choice for businesses of varying sizes. It is cost-effective and time-efficient, and it provides companies — from startups to established corporations — the flexibility to expand their business with minimal risks.

Despite usual concerns regarding information security and time zone differences (specifically in the case of offshore services), hundreds of companies across the world have made a shift to utilize outsourced services.

In fact, according to Deloitte’s 2016 Global Outsourcing Survey, 78% of respondents felt positively about their outsourcing relationship.

This is typically due to a variety of factors, which can be summed up in these five good reasons why outsourcing is a sensible choice for businesses.

Cost savings

In Deloitte’s 2016 Global Outsourcing Survey, 59% of the respondents cited cost as their primary reason for outsourcing.

Of course, hiring new employees means additional expenses on equipment, maintenance, and infrastructure — which could have an impact on a company’s finances. Startups will mostly be affected by the costs of in-house staff recruitment, but even larger companies can encounter such problems in the long run. With outsourcing, however, businesses can avoid this kind of financial strain and actually save on costs.

According to Deloitte’s Global Shared Services 2017 Survey Report, the average annual initial savings from new shared services implementations is approximately 15% — that’s 15% profit earned from profit saved.

Time efficiency

Finding qualified and highly competent professionals to fill an entire team could take months, and in most cases, recruitment is a time-sensitive matter. Projects need to start on time; otherwise, deadlines and plans will have to be pushed back, which can cost companies tons of money.

By outsourcing jobs, businesses can have access to a pool of highly skilled and trained professionals without having to go through the whole process of selection, interviews, and on-boarding. Outsourcing basically cuts the search and takes over the task of managing people. This allows companies to have a better focus on quality and output.

Effective tools and processes

Efficiency is apparent in the processes used in the outsourcing industry. While technology certainly has a lot to do with this, the success of outsourcing projects can also be attributed to the systematic procedures in place.

For instance, when Canon decided to outsource over 200 roles to Converga in 2015, the whole transition posed challenges to the organization. Among the business areas within Canon, there was a poor perception of outsourced business solutions. Furthermore, the employees were experiencing change fatigue as the company had only recently implemented a major replacement of core systems and processes. Going through the transition of outsourcing jobs was another big change for everyone in Canon.

Nevertheless, the migration was eventually carried out with huge success in 2016. With Converga’s resource library full of tools and templates for managing transitions, it became easier for Canon to accomplish the project. The organization was well on its way to improving its business efficiency and lowering overall costs, two of its objectives when it agreed to outsource.

Apart from processes ensuring smooth transitions, reliable outsourcing companies also have procedures that guarantee steady productivity. In Deloitte’s Global Shared Services 2017 Survey Report, 73% of respondents reported an increase in their shared services productivity by 5% or higher.

With technologies continuously being developed, outsourcing is only expected to yield higher productivity and more savings in the future. In the same survey by Deloitte, 24% of respondents have begun initial research on Robotic Process Automation (RPA) and 36% of respondents believe that RPA will deliver 20% or more savings.

Indeed, everyone can anticipate further improved services and efficient processes.

Focus on core business

Deloitte’s 2016 Global Outsourcing Survey showed that 57% of respondents outsourced services because they wanted to focus on their core business.

Outsourcing enables companies to better concentrate on the aspects of their business that bring in profit, without sacrificing the quality in any of its minor areas. By enlisting outsourced services, organizations can put more focus on nurturing their business before physically expanding and dealing with larger internal teams.

Keeping the company as lean as possible gives it more room for experimenting; changes can be easily implemented without having to cascade new information through a long chain of command.

Better resource allotment

Outsourcing provides a way for organizations to manage their resources more wisely. Instead of hiring an in-house staff for jobs that have to be done on a regular basis but not necessarily every day (i.e. accounting, payroll, etc.), businesses can seek to outsource these roles. There are outsourcing companies that focus on providing certain services, and getting their specialized expertise will guarantee quality deliverables lower costs.

Outsourcing naturally has its merits and pitfalls depending on the nature and status of a business. Nevertheless, its benefits are clear and undeniable — outsourcing can ultimately help companies of varying sizes flourish through efficient processes and solutions while keeping costs low.