Why companies should outsource their business processes

Companies that outsource any of their business processes overseas do so because of the competitive rates outsourcing companies can offer in comparison with the cost of retaining permanent staff to fulfill the same needs.  Organisations gain lower operating costs, improved information access and a reduced business risk, as well as an enhanced service for their customers.

The primary motive in outsourcing a business process is to allow the business to invest most of their time, financial and human resources into building effective, growth strategies.  Fixed costs are transformed into variable ones and the burden of managing a large workforce and provisions of company benefits are reduced. The variable cost structure helps companies to respond to changes in required capacity and does not require a company to invest in assets.  Flexibility in resource management is increased and response times to major environmental charges are reduced.  Companies can focus on core competencies without being burdened by the demands of bureaucratic restraints.  Key employees will subsequently be released from performing non-core or administrative processes and can invest more time and energy in building the organisation’s core business to create a competitive edge.  Furthermore, a company can maintain growth goals while avoiding standard business bottlenecks.

The business should thus focus on improving productivity while trimming down unnecessary costs.  Non-core business processes should effectively be outsourced as these tasks consume time, essential resources and energy realizing a more cost-efficient system.  These processes range from production to customer service to support functions.  Outsourcing these business processes should not be viewed as a waste of time and financial resources, but rather a rewarding strategy to be followed.

Business processes that are typically outsourced are: Customer Relationship Management; Tele-servicing and Product Support; Finance/Accounting/Billing; Logistics; Supply Chain Management; Back Office Operators; Legal Database Maintenance; Information technology and Web Design/Development/Maintenance.

Business process outsourcing also poses as an opportunity to get a foothold in any new country by making new clients, setting up new business offices understanding the domestic market etc.  In the midst of a pending recession, US companies would do well to outsource their non-core business processes to reduce their fixed running costs and maintain their focus on organizational goals.