The term outsourcing has been frequently used and heard in the business world, more companies embracing the concept to get ahead and maintain operations effective and simplified. Actually concluding whether an outsourced approach towards different processes that are required by your business would be an advantageous choice demands from you a thorough understanding of the subject. The following details will make things a bit clear for you, allowing you to fully grasp what outsourcing stands for and what it can do for your business.
A simplified definition for this concept would be the business practice of obtaining goods or services from a party outside the company. So, instead of using your employees, staff and resources to access certain services or goods that are relevant for your firm in particular, you rely on a collaborator. Outsourcing was recognised as an actual business strategy in 1989, becoming a part of business economics in the following year. Since then, many ramifications have been developed, and while some controversy has revolved around the matter, numerous countries, especially UK, have used this trend to their advantage.
Why do companies outsource?
The main question that lays here is why do companies outsource? Why has this option become so popular in the UK and on a global level as well? While the reasons that trigger the necessity of outsourcing differ, depending on the specifics of each company, there are a few standard aspects that remain relevant in all cases. You should be aware of a few clear benefits that you will be able to reach, if you make the most of this business trend:
- Reduced expenses are of course what trigger the high appeal of this possibility first, in almost any outsourcing scenario. It can be far more affordable to outsource certain services instead of having them covered in-house
- Increased efficiency – you can rely on experts to handle various operations your staff might not have much expertise of. You will be getting faster and better services, and manage to keep your business on track and ahead of competitors.
- Focus on core areas – you will be saving time, money and resources, all of which can be directed towards the core areas of your company, which means growth and development can be obtained faster and more effectively.
Considering the complex nature of the subject, various misconceptions have been linked to outsourcing, and controversy has been created around the concept throughout the years. The expectations of some firms in regards to outsourcing goods or services can slightly differ from the actual reality. Losing control of your company might be one of the concerns you have at the moment. However, in the majority of cases, you would be outsourcing non-value-added workload, meaning essential tasks are still being carried out in-house, and you are still in full control of your business. Data loss is another common worry here. BPO partners are however obligated to provide you with confidentiality guarantees, so sensitive data will be protected through rigorous protocols and strict contracts. You might also tend to believe that outsourcing is only for large enterprises, but it’s quite the opposite – a small business would benefit more from outsourced support, considering its need of maintaining operation expenses to minimum. Because you have such a wide pole of options to choose from, and you can choose your partners from different parts of the world, so you will be able to receive adequate services or good, and not compromise on quality.
There are many scenarios in which outsourcing comes as the ideal solution. A law firm, for example, could profit from using a cloud computing service provider to back up its files, without needing to invest capital in its own technology. Small businesses might find it more affordable to have their bookkeeping requirements handled outhouse, instead of developing an accounting department in-house. Payroll and health insurance services are also fluently outsourced by a wide range of businesses with different profiles. These are only a few examples of how different firms are resorting to this concept to reduce expenses, without having their processes or profits affected. Outsourcing has been often used as a strategy of gaining competitive advantage through costs reduction.
Outsourcing for UK-based enterprises
The UK is one of the countries where outsourcing has had the biggest impact. Despite of what you might tend to believe at first hand, companies in the UK choose a wide majority of their collaborators from Europe grounds, and not India, as many other countries do. Eastern Europe has been a main player in the list of global outsourcing destinations, especially for the IT industry, which is most frequently accessed. While India remains a top outscoring destination choice, it seems that European countries have become the preferred option by UK companies. Upon research, you will discover that the most attractive countries for this purpose are Romania, Bulgaria and Poland. There are many factors that determine UK-based companies to collaborate with these AT Kearney’s 2016 Global Services Location Index listed countries. Minimal time differences and geographical proximity are two of the most relevant reasons why English firms are opting for Eastern European outsourcing, but the main detail that seems to influence the majority of the firm’ choices is cultural affinity. Several other benefits have been pointed out and accessed in recent years by UK companies that are handling their operations with European outsourcing support:
- Financial transactions can be made in a convenient and safe manner when these are kept within European grounds
- Compliance with different types of business operations
- On-point business ethics
- A wide pole of experienced and reliable professionals
As you can see, there are a few things that need to be addressed when it comes to widening your perspective on outsourcing and what this concept stands for. Despite a few concerns that you might have on the matter, all factors indicate that outsourcing can be a smart, convenient and financially-wise business move that might influence the further growth and development of your business. It’s important for entrepreneurs to work efficiently and implement solutions that allow them to focus on key operations, instead of wasting time and resources on routine tasks that could be easily handled by more experienced collaborators.