Outsourcing is the process of delegating a business’s activities to an external party who will perform the said activity on behalf of the organization. Companies of all industries and sizes around the world are adopting this fancy new method which has proven to be extremely effective in improving the overall efficiency and profitability. So how exactly does outsourcing benefit an organization? In this article we will look into a few of these.
Ability to focus more on core activities
For an enterprise to be successful at the very beginning, it needs to have strong and well-organized departments for the core functions that adds direct value to the organizational bottom line. However, along with time the entity will expand and the back-office functions or in other words, the non-core functions will be the ones that will be most affected by this expansion. Instead of allocating large amounts of capital for establishing and continuing dedicated departments for these functions, it is wiser to outsource them. A manufacturing company for example must outsource the IT activities to managed IT service providers so that they can allocate most of their resources to improve the manufacturing function.
Can keep the operational control
Some managers are under the false impression that they will lose all control over organizational activities if they are contracted to outsiders. As long as the contractor is reliable and the communication between the two parties is smooth and barrier-free, any company can expect to receive the highest quality service at the highest level of efficiency at a lower price. Your managed IT services for example will be performed by only the most qualified professionals who are well experienced in the industry. But you, as the client will have the exclusive authority and the power to control the manner in which these activities are performed. Constant communication will ensure both parties are satisfied with the way things are going and if the manager is unhappy with the contracted party, they can always inform them and take the necessary steps to amend the issue.
Demand for most products and services can often fluctuate during any given financial year and managers must be able to meet these varying demand requirements in a way that positively affects both the organization and the customer. Maintaining the same number of employees throughout the year will either result in a labor shortage during periods of high demand, or a labor surplus during periods of low demand. Either way, the bottom line of the company will be affected negatively and this must be avoided at all costs. Outsourcing gives an enterprise the flexibility to raise or lower the labor requirement in relation to the level of market demand.