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Top 4 reasons why companies outsource

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Outsourcing lets organizations delegate their processes to a third-party provider. This is a strategic move for companies when they decide to expand their operations offshore.

Clients can delegate specific tasks in a short-term or long-term contract depending on their outsourced services. They can even transfer the entire team to their company when they want it.

There could be many reasons why companies outsource their services. This article discusses the top four reasons for doing so.

Why do companies choose to outsource work?

Companies outsource jobs and services for several reasons – cost saving, cutting back on resources, making more room for growth, remaining on top of the industry ranks, and more.

Businesses are better off with outsourcing as one of their primary business models. Small companies to prolific names delegate their services to external providers to enable their in-house team to perform services in their expertise.

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Outsourcing can give you an edge over your competitors, and there’s no doubt about it.  If you are new to outsourcing and want to hire your first call center or BPO company, you might relate to some or all of these reasons.

Why do companies choose to outsource work

1. Save on labor costs and operational costs

Labor and operational costs are some of the main reasons why companies outsource their services.

Business outsourcing gives you access to the workforce and resources you need for your operation. Your BPO company helps you hire highly-educated staff offshore at a fraction of the cost of their local counterparts.

This is because most outsourcing providers in lower-cost countries such as India and the Philippines have low costs of living. A minimum of $500 per month can go a long way, with bonuses and benefits already covered.

At the same time, your service provider will take care of the equipment and space for your entire operation. This includes office space, desktops, phones, and office supplies, to name a few.

Given that you don’t need to provide these resources, you can save money, scale quickly and prioritize your core business.

2. Save time and effort

Outsourcing’s potential for further savings is one of the main reasons it is a sought-after strategy.

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An eight-hour shift could be easily consumed by routine tasks such as answering emails, data encoding, and bookkeeping. These tasks can drain the energy, effort, and creativity of your team.

Multitasking can even hurt your and your team’s productivity. As a result, you might have difficulty motivating them and getting the required output quality in their work.

Outsourcing these repetitive tasks frees up your team’s time so they can take on the core aspects of their responsibilities.

3. Focus more on core competencies

The entire idea of an outsourcing strategy is to save money, time, and effort to focus on the core aspects of your business.

Outsourcing helps you focus on your core competencies by delegating small, day-to-day tasks. When used effectively, this gives you some leverage among your competitors, plus a work-life balance.

4. Lessen operational risks when scaling

Lastly, when you outsource your services, you also share some risks with your BPO. This includes operational risks when you decide to put up an offshore office.

They will take care of the requirements and compliances needed to set up a new office. You can ensure that your team will be in a proper office space with adequate workspace, high-speed internet, and a clear phone connection.

They can also take care of employee training, monitoring, and salaries, as included in your package.

Also, when demand for a specific task goes down, you can quickly scale your full-time employees with them.

Why outsourcing is necessary

Outsourcing, along with offshoring, remains to be an integral part of the BPO industry. Whether outsourcing a business process or manufacturing services, teaming up with an external business partner will give you several advantages.

Most companies flourish when partnering with external firms. In response to the sudden boom in the industry, organizations responded positively to the service provided by outsourcing agencies.

Of course, some executives and industry leaders have met this movement with hesitation, which should not surprise anyone.

That being said, measuring your outsourced team’s performance and success shouldn’t be hard. With all the new technology and platforms in the market, everyone can see the ongoing projects, the finished ones, and the upcoming works of every team member.

Outsourcing is essential globally as companies pave the way to access better services. Outsourcing ensures prospective employees do not waste their potential and skills, whether on the other side of the world or behind a couple of time zones.

To learn more, this case study by Everise can help you better understand the benefits of offshoring for any business.

Why outsourcing is necessary

Things to consider when hiring a BPO company

A hot debate comes along with the topic of outsourcing. It is always a question of whether the company you’ll be outsourcing to can accomplish the needed tasks.

The solution always comes with good research. Consider the following when you decide to hire your first call center or BPO company:

  • How long has the company been on the market
  • The quality and success of projects they’ve made
  • Their online presence
  • Feedback from their current and past clients

While these are not fool-proof solutions to finding the right outsourcing partner, considering these factors can help you effectively choose a firm that could fit your ideal business model.

The best way to ensure the partnership works out is to be clear about everything. Draft a contract to specify every detail of the outsourced tasks, so you can get the other party’s commitment and focus on providing the services you need.

Depending on your vision, outsourcing could be a great strategy to help you maximize your business and reach its full potential.

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Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

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Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,300+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.