“To grow, you need to cut ties with things that pull you down.”
Working has changed exponentially in the last few decades; profitability is at the core of everything we do. With the approaching recession, ever-changing interest rates, and supply chain evolution, every business needs to go beyond its boundaries and look at cost reduction methods, which have become a necessity rather than a choice.
A strategic step is required to maximize profits without compromising the standards of products and services, which is now known as Outsourcing. From cost reduction to reduced stress and enhanced quality, outsourcing has emerged as a solution to areas beyond a business's capacity or capability.
What is outsourcing? Let’s get into the details!
Outsourcing is a practice that businesses follow to sublet some essential business functions to a third party. These can either fall outside their expertise or be time-consuming. It is a strategy that involves contacting an individual or a team to handle the business's back or front office functions, which helps them save time, cost, labor, and resources.
What has emerged in the past few years is 'Offshore outsourcing.' Companies have been hiring cheap labor from different countries, which helps them cut costs, increase profit margins, and generate employment.
A classic example of how to understand this process is to imagine owning a multinational financial services corporation. You might outsource your back-office work to another country to enhance efficiency and get top-notch labor at a lower rate.
What are the types of outsourcing you can tap into?
Every business can use outsourcing, but understanding the different types is crucial to taking advantage of the process. Let’s discuss some common types of outsourcing below.
1. Process-Specific Outsourcing
If a business is looking to improve a specific process, this type of outsourcing will help to improve efficiency, streamline it, free up internal labor, and reduce costs. You might want to outsource customer support, recruitment, legal work, or data handling, among other processes.
| According to research by Clutch, 37% of small businesses outsource accounting and IT services. |
While this practice can help a fast-growing small business manage processes well and big businesses direct their employees and expertise to more pressing in-house functions and strategies, you are giving up some control over the process.
Designing a standard operation procedure can help set the ground rules, ensuring both parties are streamlined and satisfied.
2. Manufacturing Outsourcing
When you enter business, you aspire to create the best products the market has ever seen. This can easily be achieved by hiring the best people who know how to make them the best. But did you know instead of investing big in infrastructure, recruitment process, and equipment, you can outsource the manufacturing? This common practice in retail and e-commerce industries involves contracting with a manufacturer to get them to produce products for you but in their own time and space, using their labor and equipment.
This allows businesses to cut costs in multiple areas while being assured of the top-notch quality they will receive. Strict quality control measures set by you or the manufacturers can ensure that the product meets your specifications.
However, it is pivotal to underline that quality concerns and delayed supplies can pose a potential risk in the long run. So, here's how you can tackle this issue with outsourcing!
3. Project Outsourcing
Outsourcing a particular project, be it small or big, simple or complex, has become a common practice to ensure the end results are of the finest quality. Whether outsourcing something as simple as logo design or as complex as software development or digital marketing, outsourcing can guarantee speed, quality, increased flexibility, and ease of supervision.
Yes, working with a new service provider can be full of ifs and buts, so connecting with one via a reference or accessing a database of ruptured and safe service providers can help you be at ease.
4. IT Outsourcing
If you constantly say, “There’s a technical glitch in our system," IT outsourcing is for you. From building IT infrastructure and giving advice on how to effectively use it to solving IT issues and managing errors and software, technical support can be very fruitful for the smooth running of your business — all thanks to the specialized skills and knowledge of the professionals.
| Communication gaps and data loss are always a matter of concern, but nothing is unfixable. |
5. Operational Outsourcing
Suppose you run a clothing business. With the rise of social media marketing, your online presence is very important in reaching your target audience and getting customers. Now, with multiple tasks at hand, this isn’t at the top of your priority list, despite your awareness of its importance. Here is when operational outsourcing comes into play.
| Delegating specific operations to a third party working in your space alongside your team or separately to reduce internal workload and expand your business. |
A third party’s strength in the area and tools potentially reduces the chances of error, minimizing labor costs and achieving the desired results. However, increasing rates, misaligning goals, or making minor errors can increase costs, reducing profit margins.
The 5 above-mentioned areas and many business functions can be outsourced. Wondering what more can be covered? Let us help you through a concise list:
Think no more. The time to outsource these services is NOW-
- Digital Marketing: Yes, we are stating the obvious, but are you still oblivious to the advantages of outsourced digital marketing services? Because it can help you reach your audience in unimaginable ways.
- Insurance: Looking to boost customer experience? It’s time to outsource your insurance back-office support services to someone on their toes about regulatory changes, compliance management, and risk mitigation, among other areas that lead to success.
- Accounting and Bookkeeping: Learning about processes and compliance standards is not a cakewalk; hence, if you are not an expert, look for a skilled accountant. If you are a growing business, outsourced bookkeeping can increase efficiency, improve margins, and ensure timely completion of tasks.
- Customer Support: Customer satisfaction should be paramount if you have a scaling e-commerce business. It not only comes from delivering on time or meeting expectations but also from addressing their concerns. But don't forget to outsource it without a defined process to be followed by the third party.
- E-commerce: Are you constantly dealing with an overwhelmed staff that lacks the expertise to run your online store? If yes, outsourcing e-commerce services is the ideal way to keep the company profitable in every aspect. Counting on a third party takes the load off the groundwork of product sourcing or the hassle of managing the website and assisting customers online.
What stands out the most among every business, irrespective of size, is increasing efficiency and making the process cost-effective. That brings us to:
Exploring some cost-reduction opportunities with outsourcing
- Less workspace and equipment requirements directly affect overhead and operational costs. A third party is responsible for providing better services at a lesser cost while taking care of the necessary resources on their own, in their own space.
- Hiring, training, and salaries can cost businesses a lot of money and time. By outsourcing, they can access skilled personnel who adapt to changing market needs, work flexibly, and meet targets on time. Hence, businesses have more time to focus on core competencies.
- People say time is money, and we agree. If you run a business, you must allot your time strategically to yield better results. Outsourcing accelerates processes, frees up your employees and capital to focus on core functions, and helps you tap into market opportunities at the right time.
- Professional development, including training and sometimes handholding, can sometimes be more of a hindrance to success than we realize. By outsourcing, businesses can access experts who might be beyond their budget to join the internal team. This ensures businesses have the right people who will work to lead the company in the right direction.
We now understand outsourcing, its different types, the services you can outsource, and cost reduction opportunities. But it all comes down to figuring out how effective outsourcing can be for you and whether it is what you need now.
So, the big question arises: BPO outsourcing: Does it fit well with your company’s vision?
There is no guidebook, but there is a simple way to move forward.
- Start off by clearly defining your vision and laying out your process and the way forward.
- Pick up each process step and understand which ones your internal team can win.
- Now, separate the ones that are beyond your team’s expertise from the ones that you need off your plate simply because they are time-consuming.
| For example, your team might be great at software development but lack the communication skills to deal with customers. Instead of wasting their talent and time, you can cut costs, save time, and hire experts to handle everything from start to finish, filling the service gap. Once you have everything sorted out, build a relationship with your service provider so that they can work with clarity and determination towards your company’s goals. |
Whether your company is big or small, new or old, and has experts or aspiring individuals, you can always benefit from business process outsourcing if you identify and accept the shortcomings in your processes.
Looking for a BPO partner? Search no more!
Choosing the right partner is always difficult, whether in life or for outsourcing.
It is always advisable to look for an outsourcing partner with years of experience and strong credibility. In the beginning, hold discussions with them to communicate your business goals, way of functioning, and ground rules for working harmoniously and ensure clear understanding and transparency. You must seek someone willing to discuss costs and strike a cost-effective deal.
While shortlisting potential outsourcing partners, it is necessary to check their flexibility and ask how responsible they will be towards urgent requirements and how responsive they will be to sudden problems. You should consider choosing a technologically advanced BPO who understands your customers' behaviors, needs, and changing patterns and is willing to sign an NDA to protect your intellectual data.
We, FBSPL, an ITES and BPM company, have been offering our clients an efficient team, innovation, a system-driven approach, and expertise to equip them with the power of scalability while cutting costs and saving time for over a decade. If you are looking for an ideal BPO outsourcing partner that provides the right solution for your needs, whether a one-time project or an ongoing service agreement, contact us.
