As a business leader engaged in ensuring enterprise profitability, it might seem counterintuitive to consider outsourcing roles and responsibilities to an offshore company. You probably question the feasibility of additional investment or expenses and/or managing teams in other time zones or countries.
Incorporating outsourcing into a company’s business model will benefit the enterprise in many ways. According to a 2019 Deloitte report, the outsourcing and shared services sector will grow “at an over 7.4% compound annual growth rate (CAGR) from 2019 to reach US$ 971.2 billion by 2023.” If the same growth rate continues, the OSS industry will exceed US$ 1 trillion, within the next 6 years, the report states.
Why do enterprises believe in the value that outsourcing provides? Here’s 10 reasons why.
1. Grow the company
If you want to keep your company profitable and make it successful, it has to grow. Growth requires a lot more than just ideas. It requires:
- Infrastructure, such as additional office space and equipment
- Production and development capabilities, which means larger development teams
- People to staff and run the many teams and ensure continued expansion
Many companies fail to scale if they lack the means and resources – say, inadequate budget or difficulty finding trained staff – to see the ideas through to fruition.
Outsourcing vendors and partners can help with these problems. They can also assist in a variety of roles such as customer support, marketing and sales efforts and software development. It is a practical and smart way for a company to collaborate with offshore teams to achieve its growth goals.
2. Reduce operation costs
The one thing every company wants to do is save money. The bigger and more successful a company is, the greater its operational costs – rent, salaries, infrastructure.
However, one of the primary benefits of working with an offshore team is being able to get more for less. That could be in the form of larger teams, skilled professionals and more back-end support. The offshore entities have existing office spaces and pre-trained employees. International currency exchange rates mean that companies located in the Global North often engage the services of outsourcing entities in the Global South to help run their enterprises at lower costs.
For instance, a company in the United States might outsource its customer support services to a company in India. The strength of the U.S. dollar versus the Indian rupee means the American company can get quality service and increase its client offerings without worrying about exceeding budgets.
3. Engage with new talent pools
A guaranteed way of ensuring a company’s success is hiring great talent. Engaging with outsourcing partners based in other countries has many talent-related benefits.
First, your company will have access to a broad pool of talent. Third-party providers often have a large employee roster, with highly qualified, well-trained professionals in various specialized fields. This is useful when you want to hire a specialist for a short-term project. For instance, it might be more fiscally prudent to hand off responsibilities like updating chat services content to an individual in Bengaluru rather than hiring an expensive UX writer in Boston.
Second, the overseas team’s background is an asset to the company. There’s a good chance they speak multiple languages and can support services to customers who speak the same. They will also have a nuanced understanding of different societies and cultures and bring that to their interactions with clients from around the world.
4. Save time
Running a company is no easy task. One of the most important resources that is needed is time. This could be time to find and train staff, time to iron out the problems in a project, time to think about how to grow the business.
Bringing in external help, in the form of international service providers, allows efficient handling of these and other aspects of managing a company.
The composition of overseas teams can be a mix of employees with different qualifications, specializations and expertise. This ensures that one unit, and its many sub-units, can take over a range of responsibilities. The manager of the overseas team will ensure that each group under him or her performs its duties well. You will only liaise with the manager, not with each team’s individual leader.
These teams are also well-trained to hit the ground running on new projects. There is no time wasted in orientation and training programs for them.
5. Adopt specialised software
Many times, when companies choose to hire an outsourcing outfit it is for specialized tasks. Some examples are backend accounting support, onboarding new hires, providing technical support to customers, and client database management.
These specialized tasks have individual, unique software programmes that are used to perform the duties. For instance, there might be multiple accounting software programmes in the market, but the service provider you choose to work with will have a programme that suits your specific needs. The provider will employ professionals who are well-versed in various aspects of the programme and can use it efficiently to best serve you.
6. Strengthen company focus
The crux of every company’s existence is the primary product or service it offers. The best way for the company to grow in reputation and profitability is to do everything it can to strengthen that focus.
This means that upper management and high-level executives must devote energy and brain power to developing the company’s goals to complement its primary product or service. They should not have to waste their energies on low-level tasks and problems. They should have the freedom and bandwidth to think about big picture issues and use their core competencies to increase market share.
Outsourcing non-strategic responsibilities is a practical way to ensure everyone’s focus is on tasks that they are best qualified to do and that makes efficient use of their time. Instead of an executive director worrying about structuring and implementing training programs for new recruits, that job can be handed over to an overseas team that specializes in onboarding talent.
7. Incorporate value-added services
As business leaders focus on strengthening the company’s primary products and services, the mid-management executives continue to focus on the day-to-day running of the enterprise.
This could involve expanding certain ancillary activities to ensure smooth functioning of the company. For example, managers could consider introducing 24-hour customer support for quick redressal of payment issues.
While the aspiration and intention to offer the services might exist, the realities of running a business, including financial constraints, might make such implementation difficult. However, outsourcing the jobs to overseas service providers could be the answer.
8. Distribute risks
Companies that outsource some roles to overseas service providers usually follow the principle of ‘divide and conquer.’ The primary company takes care of the strategic business segments, while the offshore entity is responsible for non-strategic departments. Both groups work together to get the job done and ensure the smooth functioning of the primary company.
Splitting duties also ensures that the risks are distributed. One team’s failings or lack of performance will not bring down the entire ship. It can quickly be isolated and remedied while the rest of the teams continue functioning as usual.
9. Maximize time zone differences
Customer-facing companies that have a global presence should consider hiring overseas teams to ensure they are always accessible to their clients. Having support systems in other time zones allows for a greater window of availability to customers. This helps increase the brand loyalty of a company. An added benefit is that the primary company will not have to pay local employees in its home country high rates for working overtime.
Additionally, time zone differences mean the teams with the service provider can work on assignments and address problems outside of the primary company’s hours of business. An enterprise in Austin might close operations daily at 7p.m., but its outsourcing partner in Chennai will just be getting started on a new day. The nearly-opposite hours of operation ensure a seamless flow of round-the-clock assignments, deliverables and results that serve the client and their customers.
10. Restructure the company
A company goes through many phases during its lifespan. Some of these phases will involve either expansion or contraction based on the company’s performance and the overall economic environment. Both these phases see a large amount of change and upheaval in employee strength, company goals, budget allocations, technology adoption and so on.
Bringing in a third-party service provider to support the primary company makes the process of change faster. Rightsizing or increasing team strength can be seamlessly managed with an outsourcing partner.
These points should have given you a comprehensive understanding of the benefits of outsourcing. If 2020 has taught us anything, it is that remote working is the way of the future. So if you are thinking about outsourcing, talk to Suyati and ask to know more about how our Dedicated Global Teams can help you.