Every business wishes to quickly reach a point where they start to witness a considerable amount of business growth and businesses that actually reach this point look forward to expanding their business operations. For this, they need more infrastructure, employees, technology, and most importantly, the budget.
Medium to large-sized businesses face the challenge of keeping the costs down and meet the increasing demands of their businesses, with no compromise on the quality. One of the best solutions to this is by going for the best outsourcing companies. This refers to third-party contracts in order to perform some specific or all of the business functions.
Outsourcing is not just about cost-cutting but has proven to be a key player when it comes to meeting the strategic objectives.
The Outsourcing Reasons
As per a 2016 report prepared by Deloitte, the following reasons make it to the top of the list for businesses to consider outsourcing for their various processes:-
- 59% – To control & reduce the costs
- 57% – To focus on core business operations
- 47% – To solve issues related to capacity
- 31% – To improve and achieve quality service
- 28% – To gain access to knowledge and expert talent
- 17% – To manage the overall business environment
- 17% – To speed up the organizational transformation
The Outsourcing Statistics
Results say it all, and in the case of outsourcing, the following stats show how much success and appreciation outsourcing has garnered worldwide:-
- The global market value of the outsourcing industry stands at $85.6 billion in 2018 (Statista)
- Outsource application development is seeing a growth of 37% (IT Outsourcing Statistics 2017/2018)
- BPO’s global market value is estimated to reach $262.2 billion in 2022 (Global Industry Analysts, Inc.)
- Indian IT-BPO industry in 2017 had an accumulated revenue of $154 billion (NASSCOM)
- 40% of Indian outsource skilled people would need a skill up-gradation to continue receiving outsourcing to India owing to emerging tech like big data, robotics, AI, etc. by the next 5 years (NASSCOM)
The Outsourcing Leaders
Below are the top outsourced nations concerning employee skills, cost cutting, business environment scores, and availability (AT Kearney, 2017)
- 07- India
- 31- China
- 11- Malaysia
- 99- Indonesia
- 93- Brazil
- 92- Vietnam
- 87- Philippines
- 86- Thailand
- 76- Chile
- 73- Colombia
Top 4 questions to ask yourself before considering an outsourcing partner:-
- Are there any business processes that require external core business investment?
- Will outsourcing lead to enhanced efficiency and focus?
- How will the staff be impacted immediately and in the long run?
- Will it propel business growth?
Top 6 Checklists before Opting for Outsourcing Services
- Legal Terms
Legal terms form the primary aspect of cooperation, especially when it comes to considering an offshore company for outsourcing. This includes insurance, liability, collaboration time frames, and other crucial clauses like confidentiality and security while drafting the contract.
Legal terms might change depending on the model of cooperation (time and material, development team, fixed price, and more). The final version is mostly different than the first contract draft owing to further cooperation terms and agreements.
- Business Culture Relatedness
When you are looking for offshore outsourcing options, it is imperative that you understand the need for relatedness to your business culture. There are a lot of countries that provide outsourcing services to the US companies, but there are only a few of them who can match the quality standards that are needed for their business growth.
If we talk about cost-cutting, Philippines is preferred by a majority of the businesses but when it comes to having the right set of technology, infrastructure, and skills, along with cost-cutting, India tops the list of the most preferred countries for outsourcing.
- Market Research for the Best Price
It is recommended to conduct market research to arrive at the best price through comparisons, along with the help of online and offline reviews from friends and business associates. Compare the companies based on their price and also the quality of their services, history, technology, skilled employees, and more.
Apart from this, location and time-zones also matter a lot. Although, onshore outsourcing will let you visit the office of your outsourcing company easily, when you outsource to a nation like India, you get the benefit of the difference in the time zones. When it is night in the US, your work gets completed at the same time in India due to a time difference of around 10 hours.
- Governance and Operational Control
There are a lot of business owners who are of the view that they will lose out on the operational control during outsourcing. However, it is not like that at all since businesses have the option of handing over as much control of their business operations to the outsourcing companies as they wish to.
Therefore, it is imperative that you discuss such crucial things beforehand as canceling or amending the contract owing to governance and operational control will result in a wastage of time, money, and work quality.
- Outsourcing Requirement
You need to assess the outsourcing need for your business operations and adopt one of the following models:-
Partial Outsourcing Model
This model is apt for those businesses which have a skillful team but need additional expertise for some of the business operations like financial reporting. If you have a CFO, you can outsource payroll, accounts payable and receivable, reconciliation and more. Outsourcing these operations will not only provide you with the expertise but also free your CFO from overseeing such tasks and rather let him focus on creating effective financial strategies for your business growth.
Full Outsourcing Model
In this model, all of your business operations will be outsourced and handled by an expert outsourcing team. This model allows you to save considerably on the in-house infrastructure and employee costs, and also reap the benefits of having a team of experts who have the latest technology in place to help you stay ahead of your competitors at large.
- Work Trial
This goes without saying. Irrespective of the type of work you are going to outsource, it is imperative that you have a work trial in order to be sure of the work quality and professionalism of the company from whom you wish to avail back office services. This will clear all your doubts, and you will confidently collaborate with your outsource partner for long-term mutual growth.
Outsourcing has indeed proved to be a blessing in disguise for businesses throughout the world. The reason being it helps them save considerably on the costs and also achieve a higher level of work quality at the same time.
The above-mentioned checklists will help you in choosing the best outsourcing partner for your business operations and alike many businesses, you too will be reaping the benefits of outsourcing soon.
Author Bio- Mika Edword is passionate about customers and building products to change the way people run their business. She is also a big supporter of the startup community and contributing her skills, knowledge, and experience to assist people pertaining to insurance back office matters.