6 reasons why companies outsource
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6 reasons why companies outsource

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Why outsource and take the risk of sharing your business information with a third-party stationed in another country?

One lesson, which businesses aiming to become big learn soon in their journey, is they can’t do it all alone. Over exerting and trying to single-handedly run the management and processes, is the worst thing for the health of a company, especially as one becomes big. This is the reason they outsource to BPOs.

Business Process Outsourcing (BPO) helps organizations delegate certain non-core activities to other agencies, who can complete the tasks on their behalf. This allows organizations to divert their existing resources to core activities, while outsourcing agencies put their BPO associates as well as specialists to work on the subcontracted functions.

Albeit still the primary reason for outsourcing, cost-control is no longer the only bottom line performance indicator of a BPO’s effectiveness. Organizations today are looking for BPO service providers to offer additional value via customer satisfaction, better market penetration, and the use of new-age technology.

Organizations’ expectations from BPO industry are only rising. Here are some reasons how outsourcing benefits organizations, and by extension prompt them to outsource.

6 Reasons – Why companies outsource?

  1. Greater Operational Flexibility

Outsourcing to BPOs affords them greater operational flexibility. Companies generally outsource the functions which do not core to their business yet are important for the smooth operations. Outsourcing to a third party, specializing in those operations, helps organizations maintain customer relations and product leadership in the market, without investing extra time and effort in bringing those functions in-house.

  1. Access to New Technological Resources

BPOs also provide organizations access to innovative technological resources, which otherwise they might not have exposure to. BPO companies take up projects from large companies around the world that necessitates them to stay up to date and relevant. They do that by adopting best practices and the most recent technologies in the business space.

  1. Access to par demand human capital

Access to cost-effective human capital is the biggest lure of BPO industry. All organizations require human labor to maximize their revenues and get quality services to their customers and clients. BPO companies provide trained human capital to businesses at lesser prices. Generally, outsourcing companies hire BPO associates for which are directed by BPO specialists.

Access to skilled human capital was one of the major factors which led India to become a leading provider of offshore business services (read BPO) in 2017. Similarly, Philippines today is emerging as an attractive place to outsource customer interaction services due to its English-speaking population.

BPO specialists have subject matter expertise, while associates are trained and cross-trained for skillsets required in the company.

  1. Reducing costs

This is the prime reason businesses outsource their functions. With cost cutting as the key priority, BPOs fill the roles needed for the company’s non-primary activities in a cost-efficient manner. Working out the costs of outsourcing is the first activity undertaken by organizations when planning to outsource. Buffeted by rocky economic cycles, even large multinationals focus on keeping their costs in check to create the window for growth and expansion plans.

For instance, US corporate income tax is among the highest in the world. This, even more, prompts companies to look to BPOs in lower income tax countries to outsource their operations and benefit from cheap labor forces.

  1. Enables growth in emerging markets and new segments

Getting access to new markets and segments is not so popular but another reason for outsourcing. Outsourcing to a BPO company in another country gets the company’s foot in the door of another market, their culture, and operations. If one is looking to expand operations to another country, outsourcing can be a good starting point and give one the testing ground.

  1. Conserves investment and working capital

Outsourcing also help companies save on investment and working capital, which otherwise would have been put in running non-core activities in-house. This frees up resources for other expansionary activities.

BPOs offer businesses improved productivity and the ability to swiftly shift resources when needed. This is the reason BPO industry is known as the motor for facilitating business expansion.

 

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