subject: Outsourcing Your Business Processes [print this page] For businesses that struggle to handle the demands or to cover the costs of their internal processes such as IT support, call handling or their own recruitment process, outsourcing can be an incredibly powerful solution.
Outsourcing is defined most popularly as an arrangement where a business contracts out a specific function to an external provider. This contractual arrangement has become so widespread and popular in the latter half of the 20th century that entire national industries depend upon this kind of arrangement.
In the modern world, outsourcing can take place not just with physical processes but also with internal functions such as recruitment, HR management or even sales. This kind of arrangement can result in significant benefits for the central organisation;
Cutting down on costs and cost restructuring: Often a company which specialises in providing a third party with a specific service can accomplish the task at a much lower cost than if it was performed internally. By outsourcing, businesses are able to avoid the bulk of initial expense in setting up processes and can draw upon the experience of the contractor to optimise their ROI. Moving from an internal to an external system of process management can also greater flexibility, moving from a system of fixed costs to one of fairly predictable variable costs. This makes it much easier for a business to restructure their costs without disruption.
Drawing upon outside expertise: Outsourcing also gives a company access to operational best practise that would be extremely time consuming or expensive to develop in-house. This means that often processes can be delivered to a much higher standard than would otherwise be achievable for concerns that may be necessary but fall beyond the core elements of the business. By drawing on the talents of an outside company, a business can gain all the benefits of their specific resources - for example, access to a larger talent pool and a sustainable source of skills such as HR or technical support.
Contractual flexibility: The contractual nature of an arrangement with a service provider has two distinct benefits. The first is that it means that a business can set specific conditions that must be attained, with attached financial penalties and the opportunity for legal redress. This is rarely the case with internal services. Secondly, the arrangement can also allow businesses to achieve greater quality in processes such as recruitment by negotiating a new service level agreement with their provider, such as expansion of a service to meet the needs of a growing core business.
by: Edward Parker
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