There are numerous reasons why outsourcing your business functions makes sense. Here are the top 10.
- Reduces overhead cost
Businesses spend a major portion on their fixed and variable overheads. Outsourcing allows you to lower your expenditures on fixed costs and control variable costs that can result in significant savings. Cost reduction is one of the key drivers for business growth. When properly executed, outsourcing has a defining impact on a company’s revenue recognition.
- Reduces labour cost
Lower labour cost is one of the primary reasons why businesses look at outsourcing. Outsourcing removes the burden of hiring a number of full-time staff who are on the payroll even when their services may not be required. Outsourcing provides you the flexibility to hire workforce who can work only when needed.
- Improves operational efficiency and effectiveness
Outsourcing helps in improving operational efficiency by minimizing internal expenses, reducing risk, reducing employee turnover and saving your valuable time. When you have experts looking after your day to day operations you can be assured that your business is in the right hands. Moreover, outsourcing helps you improve efficiency by helping in-house employees focus on core functions.
- Improves processes
Outsourcing provides an opportunity to upgrade and improve your current business processes by streamlining them. It helps in enhancing your core and critical operations by redesigning your business processes. Moreover, it helps reduce risk and processing errors by following best practices and controls that can help improve overall efficiency and drive business growth.
- Reduces risk
Employee embezzlement and fraud cause an average loss of 10% for every 1 in 5 businesses. In order to deal with this, you can enforce strong checks and balances system but that can reduce the morale of honest employees. To avoid such scenarios, outsourcing is the perfect solution which helps you decrease your risk of internal fraud by having an impartial standard of checks and balances. It reduces business risk in four major categories i.e. operational risk, strategic risk, financial risk and compliance risk.
- Improves flexibility and scalability
When you outsource your business functions you are in turn minimising large investments in human resources, technology and infrastructure. This gives you an opportunity to scale up or scale down their involvement during high market demand or downturns. As outsourcing involves short term and flexible contracts with your outsourcing partners, it provides you the flexibility and scalability to react to market changes and business cycles.
- Allows you to focus on core business
One of the biggest challenges faced by businesses is the lack of time and resources to focus on core business practices. Moreover, back-end operations end up requiring significant attention. By outsourcing your major business services, you focus all of your attention and resources on more essential areas of the business. It allows you to concentrate more of your energy toward research, development and other ways of improving your business’s products and services.
- Helps you gain confidence and peace of mind
Outsourcing improves the overall functioning of your business. With accurate accounting records, timely return filing, proper compliance to laws and regulations, smooth processes, operational efficiency and much more, you gain a peace of mind and confidence to make more accurate and informed decisions. In addition, it provides security and safety by mitigating potential threats and fraudulent activities.
- Lets you focus on innovation
In this dynamic business world, innovation is the foundation on which your business rests. By outsourcing the non-core functions of your company to the third party, you channel your focus on more critical aspects of your business. It lets you divert your time and energy into developing new ideas, bringing innovation and achieve high performance.
- Allows better control and visibility
One of the biggest misconceptions among business owners is that outsourcing will weaken their control and ability to manage the organization effectively. On the contrary, outsourcing actually maintains or even increases transparency and control. Since the outsourced process is defined and documented properly, it involves more clarity. In addition, outsourcing involves highly trained specialists working with you and improving your technology landscape to further automate processes and improve transparency.