Focus On Core Activities
In rapid growth periods, the back-office operations of a company will expand also. This expansion may start to consume resources (human and financial) at the expenses of the core activities that have made your company successful. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.
Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short periodof time; Outsourcing purchasing
Cost And Efficiency Savings
Back-office functions that are complicated in nature but the size of your company is preventing you from performing it at a consistent and reasonable cost, is another advantage of outsourcing.
Example: A small doctor's office that wants to accept a variety of insurance plans. One part-time person could not keep up with all the different providers and rules. Outsource toa firmspecializing in medical billing.
Reduced Overhead
Overhead costs of performing a particular back-office function are extremely high.Consider outsourcing those functions which can be moved easily.
Example: Growth has resulted in an increased need for office space. The current location is very expansive and there is no room to expand. Outsource some simple operations in order to reduce the need for office space. For instance, outbound telemarketing or data entry.
Operational Control
Operations whose costs are running out of control must be considered for outsourcing. Departments that may have evolved over time into uncontrolled and poorly managed areas are prime motivators for outsourcing. in addition, an outsourcing company can bring better management skills to your company than what would otherwise be available.
Example: An information technology department that has too many projects, not enough people and a budget that far exceeds their contribution to the organization. A contracted outsourcing agreement will force management to prioritize their requests and bring control back to that area.
Staffing Flexibility
Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you're done.
Example: an accounting department that is short-handed during tax season and auditing periods. Outsourcing these functions can provide the additional resources for a fixed period of time at a consistent cost.
Continuity And risk Management
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.
Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.
Develop Internal Staff
A large project needs to be undertaken that requires skills that your staff does not possess. On-site outsourcing of the project will bring people with the skills you need into your company. Your people can work alongside of them to acquire the new skill set.
Example: A company needs to embark on a replacement/upgrade project on a variety of custom built equipment. Your engineers do not have the skills required to design new and upgraded equipment. Outsourcing this project and requiring the outsourced engineers to work on-site will allow your engineers to acquire a new skill set.
Outsourcing Can Help Accommodate Peak Load
Outsourcing can be used to minimize fluctuations in headcount that could result from peaks and valleys in demand. To protect staff from fluctuations in demand, every entrepreneur should staff to the valleys and outsources the peaks. The added expense per hour of contractors must be balanced against the expenses of hiring enough staff to handle the peaks and then wasting time between peak periods.
Example: A company's peak loads are frequent and the valleys are short in duration, hiring may be more economic than outsourcing. If peaks are occasional, contractors will save money in spite of their higher costs per hour.
Example: A company's peak loads are frequent and the valleys are short in duration, hiring may be more economic than outsourcing. If peaks are occasional, contractors will save money in spite of their higher costs per hour.
Exploit The Intellect Of Another Organization
Outsourcing allows your organization to obtain intellectual capital by purchasing it from another organization. Often you won't be able to find individuals with all the expertise required to develop a system. Outsourcing allows you to find those individuals with the expertise you need to get your system developed and implemented.
Example, An AEB Company outsource with the LTC Company to purchase the non-core business such as department of human resource or advertisement that not expert skill own by AEB, then the LTC Company provide these service embraced the expertise and desire that the AEB required to developed and implemented a system.
Example, An AEB Company outsource with the LTC Company to purchase the non-core business such as department of human resource or advertisement that not expert skill own by AEB, then the LTC Company provide these service embraced the expertise and desire that the AEB required to developed and implemented a system.
Better Predict Future Costs
When you outsource a function, whether systems development or some other business function, you know the exact costs.
Example : By signing a contract to outsource, you will likely be able to obtain stable pricing, eliminating the future need to shop around.
Acquire Leading-Edge Technology
Outsourcing allows your organization to acquire leading-edge technology without having to acquire technical expertise and bear the inherent risks of choosing the wrong technology.
Example: For over 35 years Lexicon has been recognized as the golden standard of digital reverb and effects processing and has continuously acquire leading edge technology for the audio industry. When company A outsource their non-core business to Lexicon, they will automatically benefit from the technologies that Lexicon have on its company. In a result, this lower down company A costs while getting a good and updateded technologies.
Example: For over 35 years Lexicon has been recognized as the golden standard of digital reverb and effects processing and has continuously acquire leading edge technology for the audio industry. When company A outsource their non-core business to Lexicon, they will automatically benefit from the technologies that Lexicon have on its company. In a result, this lower down company A costs while getting a good and updateded technologies.
Improve Performance accountability
Outsourcing involves delegating work to another organization at a specified level of service. Your organization can use this specified level of service to guarantee that it get exactly what it wants from the vendor.
Example:An ABC Company in Malaysia outsource some of their non-core system to DEF Company in India who expert in that system and this may guarantee the quality of the system that ABC Company outsources.Moreover, ABC Company also can fully focus on their core system and build quality on it.
Getting More Done Using Other people's Time
Many people fail to get started building their own online businesses simply because they feel they lack the skills necessart to do so. Ehrther it's a lack of writing, design, or programming skills that are holiding you back where there's something important you need to know; you can outsource everything you lack the skills to do yourself, and build your own online business using other people's time and skills to make an income for yourself.
Letting Others Do The Hard Work
Letting others to do the smaller tasks which are necessary to building a business is as old a pratices as business itself. In brick and mortar businesses, outsourcing is a common pratice; and many business owners do nothing more than keep track of the financial and customer services aspects of their businesses themselves. Moreover, when you outsourced the everday responsibilities of your business such as marketing, design, writing and even order fullfilment, you leave your time oepn to either come up with new ideas, handle customer service inquiries as they come in, or simply move on to build yet another business. Additionally, outsourcing allows business owners to spend less time working and more time with their families
Example:An ABC Company in Malaysia outsource some of their non-core system to DEF Company in India who expert in that system and this may guarantee the quality of the system that ABC Company outsources.Moreover, ABC Company also can fully focus on their core system and build quality on it.
Getting More Done Using Other people's Time
Many people fail to get started building their own online businesses simply because they feel they lack the skills necessart to do so. Ehrther it's a lack of writing, design, or programming skills that are holiding you back where there's something important you need to know; you can outsource everything you lack the skills to do yourself, and build your own online business using other people's time and skills to make an income for yourself.
Letting Others Do The Hard Work
Letting others to do the smaller tasks which are necessary to building a business is as old a pratices as business itself. In brick and mortar businesses, outsourcing is a common pratice; and many business owners do nothing more than keep track of the financial and customer services aspects of their businesses themselves. Moreover, when you outsourced the everday responsibilities of your business such as marketing, design, writing and even order fullfilment, you leave your time oepn to either come up with new ideas, handle customer service inquiries as they come in, or simply move on to build yet another business. Additionally, outsourcing allows business owners to spend less time working and more time with their families
