Generally, an entrepreneur wants to control the entire mechanism of the business however, in doing so, at times, he loses focus on product enhancement or business growth. Outsourcing the backend functions of the business helps him in multiple ways;
- Cost effective
- Better control
- Focus on core business
- Pay-per-use Model vs Hiring Full Time Employee
- No need to deal with multiple vendors
- Timely Business Analytics & Dashboards
- Data Security
- Proactive Compliances Communication
- Business Advisory & Consultation
- Work can be done offline saving seat & infrastructure cost
Please read below article to understand how outsourcing is beneficial for an entrepreneur.
What is outsourcing
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally & sometimes involves transferring employees & assets from on firm to another.
Outsourcing includes both foreign & domestic contracting& sometimes includes offshoring (relocating a business function to a distant country) or nearshoring (transferring a business process to a nearby country).
Not too long ago, companies that were looking to hire highly-skilled tech talent were limited to candidates that lived within a certain mile radius of an office location. In high-tech hubs like Silicon Valley and New York City, the talent was easier to find, but more expensive to hire. In smaller cities, these types of programmers were few and far between.
Today, an organization can hire the exact person or team they need for a specific project and it doesn’t matter if that person or team is located halfway around the world. Thanks to modern technology and the internet, access to technical experts is easier and more affordable than ever before.
Outsourcing has stepped up to meet the maturing needs of the tech industry and is now revolutionizing the way business is done in just about all sectors.
Why should you outsource
The two main reasons that organizations decide to outsource are to reduce costs and to have the ability to focus on core business goals and planning. But the research shows a shift in industry thinking. Outsourcing is not just about saving money anymore. It’s seen as a critical tool in innovation.
The primary industries for outsourcing are Consumer & Industrial Products, Financial Services, Life Sciences & Healthcare, and Technology, Media & Telecomm. There has also been a growing increase in outsourcing from industries such as Real Estate, Facilities Management and Procurement.
Automation is having a huge impact on outsourcing. Just as the way we work is changing thanks to outsourcing, the outsourcing landscape itself is changing thanks to automation. While several outsourced positions will be eliminated, there will be many more high-skilled, higher-paying jobs created as a result. Outsourcing is often undertaken to provide enterprises a competitive advantage by delegating business process to external agencies and realizing the benefits of low labour, better quality and improved innovation. While this provides a good picture of the fair side of the coin, most managers however need to grope with the possible shortcoming of the process and the corresponding impact on the company’s core processes.
Pros & Cons of outsourcing
Outsourcing is often undertaken to provide enterprises a competitive advantage by delegating business process to external agencies and realizing the benefits of low labour, better quality and improved innovation. While this provides a good picture of the fair side of the coin, most managers however need to grope with the possible shortcoming of the process and the corresponding impact on the company’s core processes. To best analyse the opportunities presented it is essential to reflect upon the advantages vis-à-vis the disadvantages of outsourcing.
The pros of outsourcing often positively reflected by enterprises across industries include –
- Better revenue realization and enhanced returns on investment
- Lower labour cost and increased realization of economics of scale
- Tapping in to a knowledge base for better innovation
- Frees management time, enabling companies to focus on core competencies while not being concerned about outsourced routine activities
- Increases speed and the quality of delivery of outsourced activities
- Reduces cash outflow and optimizes resource utilization
The cons of outsourcing
Often weighed with the advantages before any decision on outsourcing is undertaken, the following represents some of the possible disadvantages often dwelled upon –
- Possible loss of control over a company’s business processes
- Problems related to quality and turnaround time
- Sluggish response times coupled with slow issue resolutions
- Shortcomings in performance vis-à-vis expectations
- Lower than expected realization of benefits and results
- Issues pertaining to lingual accent variation
- An irate customer base coupled with enraged employee unions
Examples of good outsourcing – profitable outsourcing examples
As one of the top companies that pride themselves on taking care of their in-house culture and employees, it might look as a bit of a mistake to list Google here. Well, it’s not because the tech giant headquartered in Mountain View, California, has been taking advantage of outsourced staff for years. Whether it was a matter of IT specialists, developers, as well as virtual assistant types of work, Google is a strong implementer of outsourced work to take care of the many projects they continuously deploy and work on.
One area that made it on the news, and that many might not know about, it’s when they decided to outsource phone and email support for AdWords to around 1000 reps. AdWords is one of their top grossing product, so they wanted to have the biggest ROI possible out of it. And, this might not come as news to you, they’ve succeeded.
Opera
Opera is a modern and light web-browser born as a research project inside Telenor, the largest Norwegian telecommunications company. It’s first public release dates back to 1995 when the project branched out into a separate company, named Opera Software ASA (bought by Oracle afterward).
As with many other startups, with uncertainty breathing down their neck, it was a matter of launching the product without squandering all the money the company had at that time. That’s why they opted to outsource part of the development to developers in more than 25 locations around the world to create and implement their platform.
Expensify
When it’s time to do your taxes, you always scream at yourself: ”Next year, I’ll take notes and store all my receipts as soon as I spend any money. I promise”. Then the next year comes, and you might find yourself in the same situation, just a bit more frustrated. Founded in 2008, Expensify wanted to help people by providing a tool to collect expenses, keep track of receipts and transactions, all in a more convenient way.
Before becoming a company with 130+ employees and over 2 million users, Expensify partnered with an outsourced international software house to take care of their back-end systems; this enabled them to concentrate (almost) exclusively on front-end development and ultimately growing their business.
Future of Outsourcing
The future of outsourcing is digital. Outsourcing providers will increasingly use digital systems to offer faster, smarter, better and cheaper services. Functions currently performed by people will increasingly be automated. Outsourcing contracts built on the traditional assumption that the services are provided by people supported by tools will be fundamentally changed to reflect that the services are provided by digital tools supported by people.
- Outsourcing relationships are now more standardized, and process and people driven rather than price driven. This change is believed to level the playing field for outsourcing service providers in the future
- Cost pressures will pave the way for custom outsourcing contracts that are flexible in their SLAs (Service Level Agreements) and scope of delivery
- Small businesses, startups and SOHOs will witness a higher adoption of outsourcing in order to reduce the operational inefficiencies and increase their time to market
- Rising raw material, transportation and oil costs will make it important for companies to look at outsourcing in order to keep their operating costs low
- More high-end critical business functions will be outsourced in the next decade, while outsourcing of low-end services will stabilize
- Latin Americaand Europe might provide stiff competition to India as the favored outsourcing destination
- As businesses move towards cloud outsourcing; support and development will increase
- Manufacturing and Pharmaceutical businesses will move to cheaper destinations, such as India to take the advantage of low labor and operating costs. Additionally, research and developmentoutsourcing in these industries will also tap into the vast outsourcing potential of India
- Will outsourcing survive in years to come? The answer is a definite yes. Outsourcing will continue to survive in the future, as it provides companies the access to specialized skills and save on time and effort, which can be channelled into the other core business ventures.
Why infinzi
infinzi is a multi-service, multi-location business consulting & financial service organization established in the year 2017, with offices or associates in Mumbai & Hyderabad.
infinzi was founded in the year 2017 as an entry level firm to fuel further growth in the organizations. Equipped to meet the changing demands of the corporate & non-corporate industrial, commercial & financial businesses with its resources which include more than 20 professionals & highly trained personnel with specialized service capabilities in diverse fields covering a wide spectrum of activities.
We define our success not by size but by client satisfaction. The companies underlying aim is to provide an integrated service to its clients covering Business Consulting, Finance & Offshore Accounting. This has attracted a large clientele covering a wide spectrum of industries such as manufacturing, trading, renewable energy, chemical, hoticulture, etc
With highly trained personnel with specialized service capabilities, we are the advisors for many large organizations. infinzi’s growth has come almost entirely from within, generated by client recognition of the high quality of our people & the rendering of superior services. infinzi’s client service is recognized for its technical excellence, value additions, attentiveness to client needs & the quality of interaction between the firm & its clients.
