Thursday, 1 October 2015

Is Outsourcing right for you?

Outsourcing allows organizations to focus on their core business and can create a competitive advantage by reducing operational costs.

The beauty of outsourcing is you can outsource an entire function or only a part of it.
Organizations use outsourcing as a strategic initiative to improve customer service, quality and reduce costs.

Outsourcing can be a permanent or temporary arrangement to bridge the gap in staffing, to learn better quality techniques or improvement of faulty product design.

When looking for outsource opportunities, an organization should look at potential areas and each component within that area to determine if part or all of that function should be outsourced.

Top Advantages of Outsourcing 

Cost Savings
There can be significant cost savings when a business function is outsourced.  Employee compensation costs, office space expenses and other costs associated with providing a work space or manufacturing setup are eliminated and free up resources for other purposes.

Focus on Core Business
Outsourcing allows organization to focus on their expertise and core business.  When organizations go outside their expertise, they get into business functions and processes that they may not be as knowledgeable about and could potentially take away from their main focus.

An example of this is when a grocery store decides to add a florist to their operation.  If too much focus is put on that part of the business they lose focus of the core business which is grocery.

Improved Quality
Improved quality can be achieved by using vendors with more expertise and more specialized processes.

An example of this would be contracting out a cleaning service. An outside service would have the resources for hiring, proper training and facility inspections that may not be available if the function were kept in-house.

Customer Satisfaction
The advantage of having a vendor contract is they are bound to certain levels of service and quality.
An example of this is if your IT function is outsourced and the technician calls in sick, it is the vendor’s responsibility to find someone to replace them and meet your support needs.

Operational Efficiency
Outsourcing gives an organization exposure to vendor specialized systems.  Specialization provides more efficiency that allows for a quicker turnaround time and higher levels of quality.