Did You Know That Outsourcing Can Save Your Organization Money?
This year has been cruel to the world of business. Because of the ravaging Coronavirus pandemic, many organizations have struggled to stay afloat amid lockdown measures, collapsing supply chains, and rapid changes in customer preferences.
The current situation has led companies to realize the need to focus on what they do best and leave everything else to specialists. At a time when cutting operating costs is at the top of every executive’s agenda, business process outsourcing (BPO) has emerged as a lucrative strategy to reduce the tasks that companies do in-house and the money they spend doing them.
If your organization is yet to embrace outsourcing, the chances are high that you are missing out on a critical opportunity to save money, improve your offerings, and gain a competitive edge, as you wade through the Covid-19 storm.
Is outsourcing for you?
When most companies decide to outsource, their primary goal is to focus on their core business. More often than not, this decision is driven by the realization that outsourcing companies can industrialize the delivery of a service, and consequently, offer it at a lower price.
However, although outsourcing can be an excellent strategy, not every function should be outsourced. So, before you start looking for your outsourcing partner, you must know the right tasks to outsource and the extent to outsource them.
Below are five good questions to answer when determining the intricacies of outsourcing.
1. Do you need innovation?
Time is a valuable resource in a company. If you are wasting it on routine tasks, it is time to change how you work.
Outsourcing for innovation entails leveraging third-party providers to perform mundane day-to-day tasks so that you can free up the time and resources you have and enhance focus and engagement within your business. It is this ecosystem that fosters innovation.
2. Are your resources stretched?
Recent events have forced many organizations to send many staff members home and allocate more tasks to the remaining employees. As a result, some ongoing projects have lost momentum.
If the resources you have are maxed out, it may be time to outsource. However, be strategic in your approach so as not to kill morale. Let your team weigh in on the help they need to achieve their goals before finalizing your decision.
3. Does your team have the necessary skills?
If your internal team is taking too long to perform a specific task, the reason could be that they do not have the expertise or they do not enjoy doing it. Either way, it makes sense to offload the task to someone that spends all their time doing it and has mastered it entirely.
4. Is there any need to keep the task in-house?
The decision to outsource or keep a task in-house is always tricky because both options have their pros and cons. So, an excellent way to analyze whether you need to outsource a non-core task is to consider the competitive advantage you are gaining by keeping it in-house. If an in-house function does not directly contribute to your bottom line, you can outsource it.
5. Do you plan to scale quickly?
If the demand for your product or service has been skyrocketing, it could indicate the need to outsource some tasks or processes. Rather than viewing the move to outsource as an additional expense, take it as an investment in the long run. With a larger team, you can produce or provide services to more clients and generate more revenue.
How can Outsourcing Save you Money?
A myth exists that outsourcing creates an unnecessary cost center and misuses resources. However, in these challenging economic times, it can give you a chance to focus your core resources on what matters and cut down your operating costs, all while employing the best talent out there. By leveraging outsourcing now, you can put your business in a better position to sprint forward.
Consider these five ways that outsourcing companies like Solosoft can help you save money today.
1. Labor Arbitrage
One of the most significant ways that outsourcing can help you to reduce labor costs is through arbitrage. Labor costs vary from one city, region, and country to the other. By taking advantage of these differences, you can hire the same skills you want or even better, for less money.
In recent years, Europe has grown to become one of the largest outsourcing hubs globally, especially for technology-related jobs, because of organizations leveraging labor arbitrage. The cost of contracting a New-York-based developer with ten years of experience can be as high as 70 percent more than hiring a European developer with the same or better credentials.
Despite being cheaper, European outsourcing teams are well-recognized for their skilled and experienced talent. European BPO providers like Solosoft have a high percentage of staff with advanced degrees and five or more years of experience.
2. Reduced overhead expenses
The cost of acquiring and maintaining in-house staff goes beyond monthly salaries. Even if your company is a startup and most of your staff members are interns and trainees, you will still need a physical office with furniture, electricity, stationery, a break room, cleaning supplies, etc. The more the people you have under your roof, the higher the overhead costs.
Sending your staff to work from home, as is the norm in the current pandemic period, can save you some money. However, they will likely still need working equipment and access to software tools.
Outsourcing can help you cut down a massive chunk of your overhead costs. In addition to removing the need to host staff physically, a BPO company will come equipped with everything required to complete your task.
Of course, outsourcing providers have their overheads, which they build into the fees they charge. Nonetheless, since these companies work for many clients, they spread these overhead costs across all of them.
3. Cash-flow control
When you outsource, you convert a fixed cost into a variable cost. While you pay your in-house staff a fixed salary every month, you only pay an outsourcing partner for the services you get. You can tailor your service usage to your needs so that you only pay for what you consume. Moreover, if your operation has a seasonal or cyclical labor demand, you can bring in more resources when needed and release them when business slows.
This arrangement diverts cash from fixed salaries and wages to initiatives for improving or marketing your product. By offloading fixed costs, you will be agile enough to implement new ideas and adapt to market changes. You will also be in a better position to attract and retain investors.
4. Quicker access to expertise
Hiring in-house team members typically cost a great deal of time and money. You need to acquire the right advertising channels, interview applicants, and onboard new hires. More often than not, new employees take a few weeks or even months before they settle in and give you the output you want. You may also have to invest in training them so that they have the right skills.
Outsourcing partners, on the other hand, come with the experience and expertise that you would take years to hire and build. They are responsible for any licenses and accreditation your work requires, and because they are specialists, they are well updated with industry trends and new developments. You will, therefore, be getting the top resources out there without spending any money on hiring and training.
Furthermore, BPO providers have access to tools and skills that you may not need currently but will in the future. Having an outsourcing company as a partner means having a network of specialists with a wide range of skills that you can leverage at your time of need.
5. Human Resources Risk Management
Employee turnover can be painful. Imagine using your hard-earned resources to acquire and train a new staff member, only for them to quit when you are just about to get a return on your investment. Everything you have spent on them goes down the drain.
If this employee is a crucial part of your organization, they can leave you thoroughly disrupted and cause significant financial problems. You will have to scramble to fill the position, and perhaps hire the first acceptable applicant, even if their skills are not outstanding.
Outsourcing gives you a level of consistency and assurance that you cannot get from an in-house team. A BPO partner typically has a lot more capable people at its disposal than you. Solosoft, for instance, can assign a professional to be a shared short-term or a dedicated long-term member of your team. If this person suddenly decides to leave, another resource will be instantly picked from the pool to fill the vacancy.
Find your outsourcing partner.
Outsourcing is not a magical genie that will fulfill all your wishes on demand. You must choose the right functions to outsource, and then do the legwork to find the best service provider for your organization. That way, you can be sure you are adding value to your ongoing projects.
The right BPO provider is the one that shares your vision and risks and works with you hand in hand to guarantee maximum ROI. Deeper involvement can foster a fruitful partnership for current and future projects.