Companies that choose to outsource part or all of their functions have taken a lot of criticism for the downturn that the American economy has experienced. This is understandable, since whenever a company does this, it deprives people of some job opportunities. Those opportunities are passed on to someone else. However, there are some doubts on whether or not outsourcing is an entirely negative practice. If it had no benefits, then no companies would engage in them. The reality is that this strategy has the potential to help the American worker more than it does harm.
Reduced costs
The lower cost of operations is one of the major benefits that companies experience when they choose to outsource. Rather than maintain an entire department or division, they simply pay the service provider for it instead. This cuts out the cost of the office space, the equipment, the maintenance, and the salary of personnel. These savings can instead be used as capital to increase the company’s ability to compete in its core business area. At the bare minimum, this decision can potentially save a business enough money to stay afloat longer than it would under harsh, hostile economic conditions.
Specialized services
One other aspect of outsourcing that most don’t notice is the specialized services that it can provide. IT outsourcing is becoming increasingly common because of the various ways it can help a business. Search engine optimization, email marketing, site design and maintenance, and even software development can all be outsourced. In some of these fields, it would actually be more advantageous to outsource because it spares the client business the time and effort needed to build its own team from scratch.
Building the core business
A business will never fully outsource its main functions. However, entering a contract with a BPO provider so that someone else is handling things such as advertising and research means that the client can focus all of its resources on its core competencies. An electronics manufacturer, for instance, can safely outsource back office functions to gain the capital needed to expand its production line.
The ultimate benefit of outsourcing is that it gives a business the opportunity to expand. All of the resources, finances, and time diverted from other tasks can go into making a company more competitive. A company that chooses to outsource everything but its primary line of business can focus on improving profitability. A profitable company is one that will expand, which brings up employment opportunities for its core business.