Regardless of how great a business is, no company can do everything exceptionally all the time. It is inevitable for business organisations to struggle in certain aspects. Perhaps they need help with specialised tasks or in improving their business strategy. This is why many companies—start-ups and well-established alike—turn to strategic outsourcing.
You might ask, “What is strategic outsourcing?” The infographic below will help you understand what strategic outsourcing is, the different types of strategic outsourcing services, and the benefits they can bring to your company.
What is Strategic Outsourcing?
Strategic outsourcing is the practice of delegating specific business tasks to an outsourcing service provider, including offshoring companies. Strategic outsourcing services fall into two categories: back-office and front-office.
Back-office services are those that do not directly generate revenue for the company but are essential in supporting day-to-day business operations. Finance and accounting fall under this classification. Meanwhile, front-office functions directly generate revenue for the company, such as marketing and customer service.
Companies turn to strategic outsourcing to improve their operations, productivity, and organisational efficiency. But there are several other reasons businesses around the world opt for this strategy.
The following section discusses the benefits of strategic outsourcing.
Advantages of Strategic Outsourcing
1. Access to a global talent pool
Partnering with an outsourcing company enables you to tap global talents, as your outsourcing service provider connects you to professionals with different expertise and qualifications. You simply have to specify the skills and background you are looking for, and your outsourcing partner can help build a competent offshore team dedicated to your business needs.
2. Increased capacity
Small business owners often have limited staff who work on the company’s projects. Here, delays and incomplete outputs could happen. These problems can negatively impact the company’s reputation and, ultimately, its revenue.
By integrating strategic outsourcing into your business plan, your company can handle more projects while your offshore team takes care of selected business functions. These factors can positively impact your bottom line.
3. Improved business workflow
When you work with an outsourcing company, you can get access to the latest technologies like automation software. Incorporating these technologies into your operations can help streamline your company’s processes.
Delegating some of your business tasks to your outsourcing partner also allows your in-house employees to focus on their core functions, consequently improving their efficiency and productivity.
4. Reduced overall business costs
Strategic outsourcing can reduce your overall business costs by helping your company save on recruitment and training expenses. Suppose your business needs accounting experts, but your in-house team only includes entry-level staff. Instead of spending money on hiring and training new employees, you can instead partner with an outsourcing company for instant access to highly skilled offshore staff.
Besides reducing operational costs, outsourcing also allows you to achieve high-quality output since your offshore team is well-trained in their functions.
5. Better risk management
There is always a risk in hiring someone new. There is no guarantee that they will be a good fit for your company. With strategic outsourcing, you do not have to worry about this concern.
Partnering with an outsourcing company reduces the risk of hiring the wrong people. Since outsourced teams are well-trained at delivering results, they can live up to your expectations.
6. Improved business performance
The increased capacity and improved workflow that come with strategic outsourcing can help boost your company’s overall business performance. For one, your outsourcing partner utilises their expertise and technology to help you develop innovative products or services. The time to market is also faster. Altogether, these factors can give your business a competitive advantage.
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Types of Strategic Outsourcing
Below are a few strategic outsourcing examples and services you can consider for your business. Although some functions overlap, outsourcing with the right provider can be a highly flexible collaboration.
1. Professional outsourcing
If you are looking for professionals to handle specialised functions or multiple, small business tasks, then professional outsourcing is for you. This type of strategic outsourcing involves specialised professional services such as accounting, purchasing, and administration. This is a more cost-effective solution than having your employees undergo a lengthy and rigorous training process.
2. Production outsourcing
If your business has complicated production cycles, then this type of strategic outsourcing is right for you. Your outsourcing partner can manufacture your products on your behalf, saving you the trouble and expensive costs that come with the production process.
While production outsourcing is often employed by large companies, growing businesses can also benefit from this type of strategic outsourcing. In particular, small and medium-sized enterprises with limited workforce can turn to production outsourcing to keep up with increased consumer demands during busy seasons.
3. Process-specific outsourcing
Process-specific outsourcing is ideal if there is a particular area of your business operations you need help with, such as delivery services. For instance, if you are looking to ship your products to your customers but lack the workforce or logistics, partnering with an outsourcing service provider can help you get the job done efficiently.
You could also employ this type of outsourcing for your recruitment needs. Recruitment process outsourcing companies can assist you with job posting and application shortlisting services.
4. Operational outsourcing
This type of outsourcing covers back-office operations such as logistics, data processing, and human resources, among others. Besides improving your business efficiency, employing operational outsourcing will also give you more time to focus on core business functions so you can speed up your company’s growth.
5. Business process outsourcing (BPO)
BPO is the most common type of strategic outsourcing. It covers a wide range of business functions such as customer service, administration, logistics, IT support, data entry, accounting, and marketing, among others. Hiring an offshore team of experts can be a cost-efficient alternative to creating an entire team from scratch, which may require massive amounts of time and resources.
6. Knowledge process outsourcing (KPO)
KPO involves outsourcing information-related business tasks. Employees working in the KPO industry typically have expertise in a specialised field including research and development, management consulting, data analysis and interpretation, financial consulting, and legal work.
Companies often turn to KPO to obtain a highly skilled workforce at a lower cost. If you need to gather, analyse, and interpret consumer data for a new product launch, a KPO company can help you accomplish such a complex task.
Related Blog: Outsourcing Trends in 2022
Are You Ready to Outsource?
Strategic outsourcing is a cost-effective way to scale your business, gain a competitive advantage, and stay ahead of the competition. Besides improving your organisational efficiency, it also reduces your overall business costs while streamlining your operations.
If you are ready to outsource, consider working with optiBPO. We can help you build and manage a dedicated team in the Philippines that serves as an effective extension of your organisation. Contact us today to learn more about how our outsourcing services can help you grow your business!