Nowadays, it is not uncommon for a company to outsource part of its operations or “back office” needs. The trends indicate that this is likely to continue. Expert analysis suggests that more and more companies might decide to pursue this option. There are a number of advantages to this, and outsourcing business functions can be beneficial for the client company.
Outsourcing companies provide a level of financial flexibility. The average outsourcing firm will require the client to pay a fee-for-service rate. This translates into moderate savings for the client, as it changes what would normally be a fixed expense into a variable one. The varying rates allow them to adjust their budgets to accommodate more spending than they normally would. Outsourcing services can also provide discounts for larger clients deciding to outsource. These discounts are similar to price cuts for bulk purchases.
Reduced training expenses
BPO companies also take away the need for client companies to spend resources on training staff. A client company can potentially save millions a year by not having to train employees for certain tasks and hiring an outside company to handle that instead. The savings are further expanded by not having to retain those employees, as they are working for the outsourcing firm. In the event that a client company needs more personnel to fill out a division, all that is usually required would be negotiations with the outsourcing services provider for additional manpower for a corresponding fee.
One of the major reasons companies outsource is to find specialized talent. Skilled professionals can be difficult to come by, and talent poaching is a very real possibility in some countries. Some companies turn to BPO companies for an aspect of their operations in which they are not proficient. In these situations, it is far more cost-effective for a client company to have a third-party provider handle the recruitment and maintenance of these individuals. These providers may also have access to a talent pool for operations that the client company needs but cannot handle.
Core business concentration
Outsourcing providers allow the client company to put more resources towards their main business. The more non-critical functions and departments handled by outsourcing services, the more personnel and resources a company can invest towards business improvement. This includes expanding the customer base and improving current services. Since the client can focus on core functions, they can raise efficiency and can increase customer satisfaction.
Redirecting non-essential operations can also improve the speed of certain businesses. For example, IT outsourcing can vastly improve the speed of getting programming projects through all the stages of production. A manufacturing company deciding to outsource its facilities to the areas where its raw materials are obtained not only cuts down on production time, but also lowers overhead costs.
Time zone differences
Most international companies are located in the Western hemisphere, while most outsourcing providers are based in the Eastern hemisphere. This means that the workload can be completed during the night hours of the client company and sent electronically by morning. This can improve efficiency dramatically and remove the need for the client company’s main business to operate 24 hours in their main location.
Less space requirements
Outsourcing providers are expected to provide all of the client company’s needs–including the equipment and facilities for the tasks to outsource. This spares the client the cost of finding office space and purchasing the computers and other tools that might be needed. The reduction in personnel means that the client can also save more by cutting down on unneeded office space.
Hiring a BPO company can provide long-term relief for any business. In these difficult economic times, such relief is important, and it may spell the difference between survival and demise for certain businesses. Offshore operations can boost productivity and maximize profit. The growth in the number of outsourcing companies simply gives client firms more choices and enhances the opportunity for more revenue. These days, there can be no bigger advantage.