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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.

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

There could be many reasons why companies outsource, and we’re here to discuss these outsourcing reasons.

Why do companies outsource?

Companies outsource jobs and services for several reasons. These reasons may be 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 major business models.

Small businesses to prolific names outsource their services to external providers to enable their in-house team to perform services in their expertise.

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This kind of freedom allows your team to use their day wisely, exerting effort to deliver their outputs instead of doing routine tasks that take up their day.

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.

1. Save on labor costs and operational costs

Labor and operational costs are some of the reasons to outsource your services. With hiring in-house employees, you are required to provide salaries, all required benefits, and workspaces for them.

You should also provide the requirements needed to run your new operation properly. As a small business, this might hurt your budget even more.

Business outsourcing gives you access to the manpower 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.

Hiring an outsourcing company will also take care of the equipment and space you need for your entire operation. This includes office space, desktops, phones, and office supplies, to name a few.

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

Business Process Outsourcing (BPO)
Business Process Outsourcing (BPO)

2. Save time and effort

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

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

Allow your top talent to focus on a specific task to improve the quality of work and productivity that they deliver. Outsourcing these repetitive tasks frees up your team’s time so they can take on the core aspects of their responsibilities.

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

3. Focus more on core competencies

Outsourcing also helps you focus on your core competencies and allows you to delegate small, day-to-day tasks to third-party partners. When used effectively, this gives you some leverage among your competitors plus work-life balance.

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

4. Lessen operational risks when expanding or 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 office offshore.

They will take care of the requirements and compliances needed to set up a new office. You can make sure 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 well since this is included in your package.

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

Outsourcing in 2020

Why outsourcing is important

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

Most companies flourish when partnering with external firms. In response to the sudden boom of 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 shouldn’t be a surprise to anyone.

That being said, measuring your outsourced team’s performance and success shouldn’t be hard. With all the new technology, 24/7 active communication software, and cloud computing workflow boards, everyone can see the ongoing projects, the finished ones, and the upcoming works of every worker.

Outsourcing is important on a global scale as companies pave the way to gain access to better services. Whether they’re on the other side of the world or behind a couple of time zones, outsourcing makes sure that a prospective employee doesn’t waste their potential and skills.

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

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 tasks needed.

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/or past clients

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

The best way to ensure that 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.

There are a whole lot more reasons why companies choose to outsource their services. Evaluate your team, your processes, and the work you have to do regularly.

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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About OA

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 3,000+ 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.