How Outsourcing Solves Problem Business Faces.
Outsourcing should be an integral part of every business system. No sector or organization can be fully independent. It has to receive assistance at some point from an outside company. Most businesses have come to realize that owning everything required for doing business on their value chain is not an effective way of operating. This is why there is a need to outsource.
It is just like a car manufacturing company that makes their cars and car parts themselves from scratch; the business is in charge of making the tyres, the body parts of the cars, the engine and all other components that a car is made up of. Imagine how costly operating all these sections would be. Quite simply, the company could just easily outsource or partner with companies that are experts in the various sections for fewer expenses. This is ‘outsourcing.’
According to Investopedia, Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.
In other words, Outsourcing reduces cost by transferring certain portions of work to outside suppliers rather than completing them internally.
It’s simply a business model or strategy that involves the handing over of certain processes to a third party that specializes in those processes to perform them.
Outsourcing is well known to solve a business problem by improving focus on the core capabilities of the company itself.
Outsourcing has helped businesses by cutting costs, allowing businesses to focus on their strengths or core competencies.
An example of this is Acer. The Taiwan-based computer maker chooses to outsource everything it had a difficult time with, like manufacturing in other to focus on its core strength which is branding and marketing. This led to Acer’s faster growth in sales.
Outsourcing has helped foster partnerships that yield value to the business and gain faster access to information. In a situation where you lack the competent staff to handle a particular operation, rather than employing a whole new set of staff to meet your needs, which would cost more, you can get outsourced staff to help. This can lead to the sharing of knowledge between the staff.
Why do you need to outsource services?
If you are having one or two of these concerns, there is a reason why you should consider outsourcing.
- High labor costs
- Additional expenses for infrastructure
- Lack of focus on core functions
- Mitigation of risks
- Limited market reach
High Labor Costs
The Business Issue: The labor cost of an in-house employee — which includes their salary, allowances, bonuses, et cetera — is one of the common challenges for startups or SMEs.
The Outsourcing Advantage: Instead of going through the tedious and costly agent selection process and training, outsourcing enables you to employ expertise with lower arbitrage. This will allow you to save more because it eliminates supplementary costs such as allowances, reimbursements, et cetera.
Additional Expenses for Infrastructure
The Business Issue: More in-house employees or staff means a need for a bigger physical office space. Aside from that, it also requires additional investment for operational assets and other technical resources.
The Outsourcing Advantage: All those additional necessities -office space and equipment are available in outsourcing companies, you can make the best use of all available external resources.
Lack of Focus on Core Functions
The Business Issue: Limited resources and manpower force business owners and their employees to multitask which prevents them from focusing on their core functions.
The Outsourcing Advantage: In business, time is so very important. It means money. It may be translated to additional sound and wise business plans and decisions which can improve business growth.
If you entrust some of your non-core functions to an outsourcing company, you will have more time to focus on the core of your business.
Mitigation of Risks
The Business Issue: Starting a new business requires courage because there is always some risks factor involved — financial, legal, human factor, and market risks.
The Outsourcing Advantage: Risks are inevitable. While you cannot completely avoid it, you can minimize it. And minimizing it entails not only internal efforts but also external efforts or the help from a third party. Outsourcing to ICS Outsourcing Limited means engaging in a mutual risk-sharing agreement.
Limited Market Reach
The Business Issue: Running in a limited market space also limits a business’ opportunity to extend their services and products to consumers.
The Outsourcing Advantage: There are digital marketing services like lead generation and inbound marketing that can help your business reach more people, thereby increasing your chances to close more sales.
Are you in the middle of deciding whether you should outsource for your business or not?
If yes, maybe you are experiencing some difficulties focusing on your non-core functions. It is very important that you leverage on ICS Outsourcing, your preferred outsourcing partner in Lagos Nigeria.
ICS Outsourcing is Nigeria’s leading Outsourcing company, providing a comprehensive range of outsourcing services ranging from People Outsourcing, Enterprise Solution, fleet outsourcing to Digital Marketing.
ICS Outsourcing provides bespoke Business Support Solutions to all kinds and sizes of business, supporting clients to enable the change that directly impacts positively to the bottom line. We fully understand that each client has unique requirements and may face different challenges, as a result, our approach is to create “bespoke” solutions for each client.