Whether you’re a start-up or an established company, these five reasons are sure to make you rethink if there are areas that can be outsourced.
Like any company, there are many supporting functions and components that surround the core elements of the business. A restaurant’s core elements may be the chefs and the dining room but someone will still need to take care of suppliers as well as managing the building to ensure compliance with building codes and ensuring the kitchen works. A law firm may have its team of lawyers but someone needs to take of the email server or the printers and scanners that support the lawyers.
Most likely, you’ll already have the team in place if your company has been established for a time. Start-ups will typically try to do everything in-house but there will be a time where internal capacity and capability will fall short. When that happens, what do you do? Let’s look at five good reasons these non-core supporting functions can be outsourced. Granted, it is not a clear cut solution but the big picture needs to be evaluated. For example, just because you need accounting and tax done, doesn’t mean the costs to add the capability in-house will be the salary of your new accountant. You will also need to add space, equipment, software, and more. It may not be as easy or affordable anymore isn’t it? What about managing and paying that person? How long will it take to find that person or what if they leave, what do you do then? Let’s take a look at five simple reasons BPO or Business Process Outsourcing will help relieve the non-core functions in your organization and allow you to focus on the Customer Experience.
More for Less Money
This is what everyone wants for sure. Business Process Outsourcers or BPOs are able to leverage economies of scale. This is what allows them to offer you the same services at a lower cost than it would take to do it in-house. You need to determine which are your core business processes and the rest potentially can be outsourced. One benefit besides some cost savings is that it allows you to internally optimize your resources to maximize revenue. If you really want to find out how challenging this can be, try attending one of our Celemi Simulation sessions. While most BPOs can offer cost savings, you have to also consider when the savings are tiny or even if you need to spend more. Generally, a BPO will save some costs but you should consider the next four options before taking cost as the only criteria.
Focus on what matters
As I wrote earlier, focusing on your core and revenue generation activities is important. By outsourcing the rest, you can then focus on the core business. Removing the distractions of payroll, IT or customer support can really make a difference. For example, if you are an accounting company, managing technology is not your strength and having to double-role employees or to hire dedicated IT support will end up costing more. To outsource is to remove distractions from your organization to enable it to focus on your core products and services. Not to mention the ability to execute better internally on what is important to your business.
Quality and Scale
When your organization hires for non-core roles, the result is always that the people you hire may have less to do due to the nature of the business, or due to budget limitations, you end up hiring an employee that is less qualified than you need. Your IT support staff may be spending his time on YouTube when there is no issues to fix or problems to attend to. Unless you’re in the HR business, quite likely you will not be great at managing the entire HR and employee life cycle, from sourcing, hiring, payroll, claims and more. It is clear that an in-house department will not be as experienced compared to a BPO service provider who will be serving multiple clients with experienced professionals. After all, that’s their specialty and definitely not yours.
Today is a VUCA world. It’s Volatile, Uncertain, Complex and Ambiguous. Your business needs to be agile. Threats pop up from anywhere. Digital disruption has shortened the time to go to market – not just for your organization, but also your competitor. When the business changes, your organization needs to stay on top of it all. Outsourcing allows a business to grow flexibly or even expand into areas without too much risk. Take customer service or sales for example. If you need an outbound marketing and sales team, outsourcing it to a BPO that can deliver digital and voice tele-marketing is a good way to ramp up quickly, usually within weeks compared to building an in-house team. In addition, with bi-annual or annual contracts, you’re not locked in with heavy CAPEX and staffing. Sometimes, it is just adding capacity where you need it most for a time or even to a country you have limited resources for.
Improve Service Quality
This one is primarily around resource optimization. Think about all the space, staffing, and overheads that you need for the most common outsourced functions; IT, Accounting, HR and Telemarketing and Customer Support. It can easily add up to weigh down your bottom-line not to mention your ability to deliver quality on your own core products and services, A quality BPO provider will be able to manage those functions more effectively and efficiently that you could. As a result, let’s think about what you can do if you ad that extra space and resources to focus on your core business. There is potential here to boost your core business significantly.
As you can see, there are plenty of reasons your organization or business can grow with outsourcing. Note also that out of the five, only one is lowering cost. This is because most people associate outsourcing with lowering costs directly. Sometimes, there may be no savings if you compare direct costs. For example, the cost to operate a five person HR team internally versus a BPO supplier may be equal but as I stated in the beginning there’s more to the direct costs than just salary. There are hiring costs, retention costs, office space and more. In many situations, if you examine the situation properly, the benefits more often than not, will outweigh the costs, even if the direct costs are equal or even a little higher with a BPO vendor.
If you would like to find out more about outsourcing a business function or to add a new service or function by outsourcing, please visit Brandt Global Business Services.