10 benefits of outsourcing for high-growth companies

In the first article, "Why Should your company outsource?" I summarized two main types of outsourcing, Business Process Outsourcing (BPO) and IT Outsourcing (ITO). In this article I will describe the unique benefits of outsourcing for small and medium enterprises, growth-oriented companies with sales ranging from $ 20 to $ 250 million.

Top 10 Reasons Companies Outsource

1. Reduce and control operating costs

2. Improve company focus

3. Access to world-class capabilities

4. Free internal resources for other purposes

5. The resources are not available internally

6. Accelerate reengineering benefits

7. Function difficult to manage / out of control

8. Make capital funds available

9. Share the risks

10. Cash Infusion

Source: Survey of Current and Potential Outsourcing End-Users
The Outsourcing Institute Membership, 1998

Let us briefly examine each of these advantages, and highlight the unique benefits to middle market companies.

Reduce and control operating costs

Outsourcing in general and outsourcing, in particular, can be an effective way to reduce administrative costs and production. By leveraging an outsourcing company size, specialization and lower wages, small and medium enterprises can reduce costs in non-core business functions.

Improve Company Focus

Focusing resources on core business, a company become more efficient, reduce costs, lower, providing a better service and expand its market share.

Access to world-class capabilities

Organizations take the outsourcing non-core administrative functions and make them their core business. They are experts in business processes such as HR, Sales, Marketing, Finance, Accounting, Customer Service, purchasing, business administration and IT infrastructure, electronic commerce, Data Processing, Network Management, Telecommunications, data security and software development. A well funded outsourcing companies invest heavily in engineering people, processes and technologies to provide state of the art services to their customers. This level of investment and commitment is beyond the capabilities of most mid-market companies.

Free resources for the purposes of internal Other

Outsourcing free key management from day to day routine and allows them to focus on priorities. The staff uses the most of their skills, they work more interesting and increases overall productivity. Boredom is the enemy of productivity.

Resources are not available internally

In 2005, Bill Gates of Microsoft complained about the difficulties in finding skilled programmers and opened Microsoft India. Finding qualified skilled workers is a problem for small and medium enterprises. Outsourcing allows a company to rapidly deploy a team of experts and make financial plans, marketing, production and distribution.

Accelerate Reengineering Benefits

Sometimes an executive needs to make a big change to save the organization and the staff does not have the capacity or interest to execute a plan in a timely manner. Outsourcing offers immediate access to qualified personnel who may be more experienced and receptive to change.

Function difficult to manage / Out Of Control

Managers often try to reduce costs for IT, legal, marketing, customer service and HR. Costs can be measured in dollars and the hard time that these non-core businesses to adopt management that can take you away from the core business. Before a core business does not become a bottleneck for growth, you may want to downsize and outsource.

Make Capital Funds Available

When properly implemented and executed, outsourcing improves cash flow in four ways:

or outsourcing, particularly outsourcing, is cheaper to do this internally.

By focusing more resources on its core business or become more efficient and profitable.

capital costs or fixed costs are lowered and are transformed into variable costs to drive operating margins and reducing points of failure.

As outsourcing increases or the value of a company, capital markets place a higher multiple on future earnings.

Share the risks

A well thought out partnerships that provide outsourcing outsourcing companies to adopt new technologies, methods and increases productivity. Small businesses and medium businesses can develop a partnership with a more established provider who shares the risk of innovation.

Cash Infusion

Some outsourcing companies acquire the personnel and infrastructure in cash in exchange for a commitment to long-term outsourcing ranging from 7 to 10 years .......