Outsourcing
Some reasons managers may choose to outsource include:
Cost savings
– Outsourcing to countries such as the Philippines means lower labor costs.
Knowledge
– By partnering with a well-established outsourcing provider, a company gains access to the provider’s intellectual property and wider experience and knowledge in relevant business services.
Focus on core business
– Companies can often be more efficient if they are able to concentrate on what they do best, rather than wasting resources trying to develop new areas of expertise.
Contract
– Outsourcing firms will guarantee the services they offer, whereas internal processes are not guaranteed.
Operational expertise
– Companies that choose to outsource gain access to operational best practices that would be too difficult or time-consuming to develop in-house.
Access to talent
– Outsourcing opens the door to a larger talent pool and a sustainable source of skills. It is an ideal solution for when the talent pool of the home market cannot sustain growth or when the recruitment process becomes too time-consuming and expensive.
Catalyst for change
– An organization can use an outsourcing agreement as a catalyst for major step change that cannot be achieved alone.
Enhance capacity for innovation
– Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.
Reduce time to market
– The development or production of a service or commodity can be greatly accelerated through the additional capabilities of an offshore service provider.
Commodification
– The trend of standardizing business processes, IT services, and application services has enabled companies to buy at the right price and access services that were previously available only to large corporations.
Risk management
– A sound approach to managing some types of risks is to partner with an outsourcing company that can provide better mitigation.
Scalability
– A well-established outsourcing company will be prepared to manage a temporary or permanent increase or decrease in production.
Cost restructuring
– Outsourcing allows companies to transform certain expenses from fixed to variable costs and makes variable costs more predictable.
Creating more ‘me’ time
– Individuals may wish to outsource certain aspects of their work in order to optimize their work-life balance.
Improve quality
– When contracting out a service, companies can achieve significant quality improvement with a new service level agreement that reflects their desired outcomes.
