Business Process Outsourcing – When is it convenient to focus on outsourcing

Today, outsourcing is without a doubt one of the key components of a successful company.

Business process outsourcing is usually the transfer of one or more intensive business processes to a third party, who then owns, administers, and maintains the chosen processes in accordance with defined and measurable performance goals. 

These outsourcing services are divided into two main groups: horizontal services (those that may be applied across different industries) and vertically specific services (those that demand specific industry vertical process knowledge). 

You might want to think about outsourcing if your company is having trouble keeping up with the workload and duties that are preventing you from working on the tasks that will help your business grow.

In this article, we look at why small and medium-sized businesses choose to outsource work, in what situations they should consider outsourcing, and how can these businesses benefit from outsourcing.

Top reasons why companies decide to outsource activities

A company could choose to outsource its activities, when: 

• The company wants to save money and lower costs

Less expensive options are one of the key factors that influence company decisions. When deciding to outsource, businesses can cut the costs associated with certain processes by up to 20%. The outsourced processes are of course non-core tasks that can be performed by an expert who’s not part of the company. 

When outsourcing, companies won’t have to train and pay benefits to the outsourced employees and that’s a great way of saving money and making the business more profitable.

• The company is having a hard time focusing on core tasks
  
  

When secondary tasks feel like a burden, that’s when a business decides on outsourcing! This will allow faster growth and more opportunities to expand.Companies now have a completely new window of opportunity because of outsourcing. Businesses have the option of concentrating on their core competencies while outsourcing all other tasks.

• As competition arises, businesses must be more adaptable
  
  

Business environments are dynamic and competitive. Therefore, it is important to be flexible enough to meet market demands and customise clients’ needs. In this fast-paced market, outsourcing means satisfying these needs, without having to find, hire, and train a full-time employee. With the right outsourcing, the company will receive professional support, flexible service, better positioning to competitors, etc.

• The company simply wants to delegate work
  
  

For some businesses, deciding on outsourcing it’s simply because of the necessity to delegate work, not due to costs or competition. A successful business will assign their employees what they do best and will rent out every other service that they need, for the time frame required.

• The company needs access to global knowledge, global experts
  
  

When you outsource, you allow your business to have global knowledge and access to experts. With remote work becoming increasingly normalized, you can now recruit just about anyone in the world. 

Once managers and CTOs stop doing everything by themselves and realize the importance of outsourcing, they will be able to focus more on leadership and income production.

Having access to these experts from all over the world allows businesses to see things from another point of view, change their perspective, and feel open to new ideas. 

• The company wants to be innovative
  
  

Speaking of new ideas, companies love being innovative, and outsourcing is a great way to start with innovation.  Companies bring innovation to their workplace when they outsource business processes. Innovative companies tend to be more successful, and usually have a better reputation compared to their competitors. 

• The company is growing (too) fast
  
  

The thrill that comes when things truly start to take off is well known to anybody who has led or assisted in a start-up or a new growing business. Your output has increased, and your customer base is growing. It's a wonderful feeling, but it also leaves you wondering, "What do we do next?" Growing quickly is great but it also comes with a unique set of obstacles. Many businesses discover that this is the point at which they require some outside assistance. And that sounds like a perfect situation to outsource.

First, the company should decide what can be outsourced and what should be kept in-house while creating a long-lasting outsourcing program. Then, the outsourcing process should continue.

When to outsource?

One of the most key questions you might want to make, regarding your business is exactly this: When to outsource? Outsourcing too soon or too late might result in a chaotic work environment and chaotic finances too. So, when’s the right time to consider outsourcing? 

Carefully look at the business situations below and if you think that at least one of these matches your business, maybe it is about time you begin outsourcing your activities.

• Lack of efficiency in the management of the activity
  
  

The pressure to complete work quickly and effectively is intense when sales are swift and orders are piling up. If the business does nothing to meet this pressure, the output may not be as effective as it could be. A business must prioritise managing operations during peak periods, and outsourcing is one of the best ways to do this.

Choosing the right outsourcing partner will ease your job and improve the company.

• Your employees are doing tasks outside of their area of expertise
  
  

People frequently wear multiple hats in businesses to keep things moving. However, overworking your staff can result in a disaster if you (un)accidentally make it your “business strategy.” Maintaining customer satisfaction is essential to corporate success, but so is maintaining employee satisfaction.  While there are many reasons why customers may be unsatisfied, poor service—which can occur when your team is overworked—is one of the most frequent problems. Although it would seem like the last thing you'd want to do in tough times, outsourcing might free up your team's time so they can concentrate on the tasks that first brought you those clients.

• The company is experiencing financial loss
  
  

Business owners frequently tend to neglect some vital aspects that could prove to be significant income leaks since they are preoccupied with daily work and important objectives. These leaks are frequently caused by not having the appropriate technology,  by not employing the right person for the job in an effort to save money, spending a lot of time on non-core tasks, etc.

Over time, such errors may end up costing a substantial amount of money in income. When the company’s experiencing financial loss, an ideal but also economic idea would be outsourcing. 

• The company’s budget is tight, to begin with
  
  

It's always pricey to hire in-house staff, to the point where you feel as though your financial situation is in danger. You'd undoubtedly be better off with outsourcing, given the expensive salary of full-time employees and other expenses like paid holidays, sick days, and infrastructure. In fact, outsourcing to professionals would not only reduce operational costs but also boost revenues.

• Massive processes with low-added value
  
  

Something is wrong if you notice that your business has been stuck in the same spot for an extended period. You are doing these massive processes, but with no added value. Why is that? The company is focusing on non-essential business tasks, leaving out what’s important. You can focus on your main product and steer your business toward success simply by outsourcing certain secondary activities.

• Non-core business activities

As a business grows, so do its processes and other activities. If you feel like these non-core tasks feel like too much, maybe it is time to consider outsourcing.

Benefits of Outsourcing 

When done correctly, outsourcing comes with a lot of benefits that will make your business thrive!

• Lower costs

Through outsourcing, there is a potential to reduce expenses while also increasing productivity. Additionally, there is no requirement to purchase equipment or lease space to support office operations. The business will be able to save time and money on hiring and training new employees, providing benefits, and other administrative costs because these concerns will be handled by the outsourced company.

Simply said, completing a job function has a lower overall cost – if outsourced.

• Access to skills and/or resources
  
  

Even though most businesses reward employees with multiple skills, there are some situations where it makes more sense to hire a specialist rather than spend money on employee training. Due to their expertise and experience, contractors may be able to perform a task quickly and without interfering with continuing business operations.  Companies can broaden their search, choose from a variety of companies, and collaborate with the top specialists on the planet by using outsourcing.

• Increased flexibility
  
  

When demand is high, some organisations may find it more cost-effective to hire temporary outside contractors than to take the chance of adding more staff they might not be able to pay. This flexibility in hiring is beneficial to businesses.

• Lower ongoing investment in internal infrastructure
  
  

Outsourcing means more employees will be working with their technology. This leads to lower investments in internal infrastructure, making the company save up more money. Logistically, sometimes it makes more sense to contract out services like shipping and customer support.

•  Increased focus on strategies, core business activities
  
  

You free up time to concentrate on the essential areas of your business when you delegate processes to another organisation. As a result, the business will become more productive and efficient while using fewer resources.

• New modern solutions for the company
  
  

The business may be more open to innovative ideas when you subcontract because you transfer responsibility to another organisation. The expert company will give more effective and fresh ideas because they are knowledgeable about the issue.

Bottom line, businesses are constantly seeking methods to increase their productivity and workflow, and outsourcing is one highly effective approach to do so. If done correctly, it will pay off eventually and it will the best decision the business ever took.

If you’re looking to have all benefits mentioned above and more, We Are Fiber is happy to help you. Get in touch with us here.