Reasons For Outsourcing For A Growing Business
For one, outsourcing can dramatically reduce operational costs
. For example, a company relegating its customer service and support functions to an offshore call center in another country, can save a lot of money because of the cheaper labor cost in other countries. This reason is attributed to the rapid rise of call centers in Asian countries like the Philippines. The company would no longer need to train customer service representatives by itself. The BPO company does that in its own expense.Because of these savings, companies that are in the process of restructuring their operational expenses are likely to choose to outsource their operations. Since restructuring involves minimizing costs, the fixed price that it will pay an outsourced third party will be critical to achieving that goal.
Outsourcing also offers better quality in terms of production and service. Because the third party provider is an expert with the service, the company is guaranteed quality work. This is why companies who have expanded into non-core businesses will outsource functions to those ventures, in order to take advantage of the third party's knowledge to catch up to its inexperience in the field. Production or development will significantly improve in light of the expert skills brought by the supplier's work pool. Outsourcing also provides the company access to specialized technology for a fixed price, i.e. the contract price.
Outsourcing services are bound by legal contracts with the company. These contracts allow the company to seek legal help and impose financial penalties if the third-party provider fails to provide quality services as stipulated. Compared to utilizing internal services, companies subcontracting certain jobs are guaranteed quality services through service level agreements or else they'll just terminate the contract and seek better help.
Outsourcing also gives a company the advantage of not having to manage excess capacity in terms of services and technology. Any excess in capacity and the risk of paying for it is shouldered by the supplier, as the services and technology is its property. The subcontracted service also helps in managing risks to the business that could arise from the service itself, since the provider's expertise will help address that specific risk.
Finally, outsourced functions, especially those that are provided by offshore companies, make it possible to provide the services round the clock. This is facilitated through the difference in time zones. For example, a customer in the United States can avail of customer service support from an agent in India or the Philippines, who is working at a different time of day from the customer.
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