Outsourcing Products & Services- A Strategic Business Acumen
What started in the industrial revolution in the 1970s as outsourcing services to serve multiple clients across industrial verticals, went on to become the core of every competitive business strategy. Outsourcing has since its inception gained wider control over all the elements of a business to shift the focus from supplier to business partner. It was the tactic of farming out every aspect of the business from basic to complex services, that made outsourcing a hit amongst businesses.
But what is outsourcing still remains a conflicting term for few, who often misconstrue it with offshoring.
Let’s walk you through what outsourcing stands for and what encompasses this term before we delve into how outsourcing effectively solves business problems.
Outsourcing is a business practice in which an organization resorts to a third party to handle their tasks which can range from operations to services to client management. With its division into tactical, strategic, and transformational outsourcing, it is often termed the perennial service that has stood its ground for decades and continues to emerge as a powerful tool for business expansion. From information technology services, and call center functions to manufacturing products, human resources, and even financial functions can be easily outsourced.
The staggering figure of the global outsourcing market at $92.5 billion in 2019 is proof of the vitality of outsourcing and the many benefits it offers a business enterprise.
Outsourcing Advantages
Reduction in Cost
The most tangible benefit of outsourcing is the cost savings that come from the many cost-effective yet high-quality services it offers. This can be understood from the perfect example of western countries outsourcing their services to Asia. While there is a wage gap between the western and Asian countries, with no dearth of talent in both, it generally brings cost savings to business giants to outsource their services in bulk rather than get it done in-house.
Trained Staff
Training your own staff to handle the activities can be both overwhelming and lead to cost surges, while the long supervision hours cannot be neglected. However, when the work is outsourced to another company or individual who is already competent and has the required expertise, it becomes easier to manage business verticals. This also leads to high productivity and efficiency with fewer chances of error.
Cutting-edge Technology
Incorporating the latest technology to cope with the trends can get expensive, more so when the business team has to onboard trained staff to handle it. But outsourcing the job to another company saves the massive expenses involved in the handling of cutting-edge technology.
Handling larger Volumes
The large volume of work demands a large workforce and space, which exponentially increases the cost. This also slows down the focus of the business from their core work to managing the team. However, outsourcing the work to n already experienced company eases and streamlines the workflow while enabling the business to focus more on building its brand and investing in research and development work.
A report by PA consulting brings to light that a whopping 30% of UK businesses plan to outsource by the year 2022. This figure stems from the challenges that outsourcing addresses and enables a business to grow while offering better services and products to its customer base.
