The most recent buzzword in the world of business is "outsourcing". As more and more businesses all over the world looking to save money but still offer high quality are turning to destinations such as India for transferring their support functions.
So what exactly is outsourcing and what are the benefits of shipping your non-core business functions offshore.
What is outsourcing?
A common modern practice of modern society is to outsource business support functions such as finance, information technology and human resources. Outsourcing in its simplest form is to contract a function of business to a third party. The function ceases to exist internally and often so does the ownership.
Functions to be outsourced is not limited and over the past few decade companies have contracted out everything from mopping floors to internet security. Companies spend an average of £100 billion on outsourcing a year.
The decision to outsource can be a difficult one, as a company evaluates options available as well as the pro's and con's of each. The advantages and disadvantages are not going to be the same for every company.
Benefits of outsourcing your support functions?
There are many benefits of outsourcing and just some of the advantages of outsourcing are discussed in more detail below:
1. Cost Saving
Outsourcing has its foot firmly wedged in the door as a cost saver. This may be the main benefit and the benefit that springs to everyone's mind, and therefore most often the main reason many companies choose to outsource their functions.
Due to the difference in wage in India means that jobs can be completed at a significant reduction to western countries while having no effect on quality. The quality of the services provided in India is extremely high ensuring that low cost does not mean low quality. By outsourcing to India a company can make savings of up to 60%.
2. Access to skills and resources
There is no need to spend a large amount of time recruiting a skilled team in house when the skills and resources are readily available elsewhere. A company can spend excessive time sourcing a team which is taking needed time away from serving customers needs and expectations. There is a pool of highly skilled resourced waiting around the world to serve a company's needs.
3. Time Zone
Apart from the obvious cost advantage of outsourcing to India as previously discussed, the other big advantage why more and more companies are looking to outsourcing is the time zone. When the company has closed for the day and in the land of nod, another company around the world is working on delivering a company's needs. So when morning comes a company can have satisfaction that business is complete.
4. Focus on core areas
Freeing up time on outsourcing certain business functions allows energy to be invested on building brand loyalty and invest in research and development to produce new products and services.
The main focus whether outsourcing is chosen or not is on ensuring customers receive the best quality in both, goods and in service.
This is a guest post by Louise from Business Recovery who offer a range of business turnaround solutions.