Benefits To Outsourcing Over And Above Cost Savings

It is now an established principle that is virtually unassailable in business logic that the development of a business strategy for outsourcing your companys non-core competencies (A/R, A/P, other financials, customer service, IT, HR and any other back office function) will translate into substantial savings for your company. Savings of up to 50% are not at all uncommon and, when responsible companies consider the cost of keeping such functions in house (insurance and other benefits, rising payroll, unemployment and other taxes, etc.), the decision to outsource functions which constitute non-core competencies may very well make the difference between profit and red ink.

But what most companies may not be considering is that, while the most compelling reason to outsource non-core back office functions is clearly cost savings and the benefit of cost savings is omnipresent, there at least ten key areas that may be overlooked by companies considering a strategy for outsourcing BPO functions offshore. These are keys which drive empirically established and clearly quantifiable value to companies over and beyond the traditional reason for utilizing BPO service providers: cost savings. These ten factors are interrelated and complement one another. It is valuable, of course, to calculate your cost savings but companies should take the time to also consider these benefits to an offshore Outsourcing Program over and above the substantial cost savings they will realize:

1.Partnering: Relationships that are established between competent and established BPO Providers and their clients constitute genuine and valuable working partnerships which result in certain key benefits including, but certainly not limited to, the following:

Collaborative identification of methods of assessing successes of the outsourced functions and provide a plan to continually adjust processes and metrics driving the desired outcomes.

Joint identification of those responsibilities shared by BPO providers and their clients, most particularly in relation to retained as opposed to sourced resources and activities.

Establishment of a working relationship based on perpetual action planning according to emerging and changing needs.

Relationship building based on genuine assumptions of trust and mutual reliance versus a relationship strictly based on the mere fulfillment of service-level contracts.

2.Creation of Business Value: Companies taking advantage of the many benefits of outsourcing their non-core competencies leverage BPO services in order to gain clear and compelling net new business value, which include:

Realization of regulatory compliance by means of enhanced enforcement of process centralization, visibility as well as standardization together with enhanced control of important business data.

Launching of entirely new business units and subsidiaries enabled by an enhanced availability of outsourced process delivery capabilities
Development of entirely new revenue channels from management of inventory tracking to the development of an online store, for example.

3.Enabled Globalization: Globalization as a business strategy takes on a whole new meaning and relevance benefiting clients who utilize BPO services and first mover and best of class companies who are utilizing the services of experienced Providers of BPO outsourced functions are finding that those BPO Providers are directly and indirectly assisting those clients in finding the perfect fit in the globalization equation in many ways. Some examples follow:

Many companies global delivery models ultimately translate to their own organizational and operational needs requiring globally managed business processes. Thus, savvy BPO Providers are wisely and widely investing in capabilities which empower them to support the requirements of large, globally distributed organizations in a consistent and unified manner.

Workforces at the global level are a reality that cannot be ignored as we shift into the 21st century and global sourcing is quickly becoming a regular business practice of choice in first mover and best of class companies. As many companies struggle with the best means of leveraging these resources and managing their traditional workforces, BPO providers provide an alternative model for addressing both workforce and operational needs.

Expansion of regional trade frameworks facilitate the adoption of BPO services in those geographies where regulatory requirements enable standardization and consolidation of these non-core but indispensable business processes.

4. Creative Improvements You May Have Never Thought of Otherwise, Such As Streamlining, Improving and Documenting Your Existing Processes:

Whether your company has been around for decades and may be running the risk of getting in the proverbial rut or is a recent start up or somewhere in between, every company needs an infusion of new ideas to consider as alternatives to improve your processes in lieu of the more manual and undocumented business processes you are currently utilizing. Such forward thinking is critical to remain viable and excel in your target markets. For example, the loss of a key employee can mean the loss of an entire solution delivery process formerly entrusted to that employee. Outsourcing supplies a prime opportunity to record and document these business processes, thereby effectively archiving your processes and all of the steps included therein. In other words, your partnering with an offshore outsourcing provider, by the very nature of the work they do for you, will provide the documentation of the service provided you require to maintain that function in a viable state.
5.Utilization of a proficient outsourcing provider will provide you with what amounts to complimentary consulting services. The means by which you have been providing services in a particular process will now be subject to a second set of eyes from the outsourcing provider who performs that function on a regular basis and can offer a plethora of suggestions on an on-going basis as to methods by which you can improve those functions. In this instance, the Outsourcing Provider is, in effect, providing you with a new project management approach and new, agile methodologies while documenting them for you as well.

6. Creative Strategic Opportunities to Solve Such Problematic Bureaucratic Issues as Compliance Requirements: With the advent of compliance requirements such as Sarbanes-Oxley (United States) and Basel II (Europe) and other complex regulatory requirements, corporations are compelled to utilize a partnering arrangement with large private equity firms to take their business organizations completely private. A large number of best-in-class companies are leveraging the cost savings of transferring routine back-office functions to offshore geographies in order to implement many such governmental compliance imperatives that were slowing their core processes. Partnering with a reputable Provider to outsource the maintenance of existing applications liberates your IT and other resources that you are currently utilizing to satisfy the governments compliance requirements so that you can dedicate the entirety of your in house resources to your business and not that of the governmentas it should be.

7. Enhancing Your Metrics and Measurement Program: Outsourcing your repetitive processes to an efficient Outsourcing Provider will greatly enhance the institution of your metrics and measurement. While metrics and measurement is all too typically low on the priority list of many companies when metrics and measurement is conducted in-house, the instant that you outsource that process you will find that the formerly somewhat ignored process is now subject to a reliably proper method of measuring and reporting these important programs.

Discovering New, Fresh and Creative Perspectives In Your Strategical Approaches and Technology Applications: An outsourcing service Provider that performs functions similar to that of your company for other customers will almost invariably provide you with fresh new perspectives as with regard to your companys approach and technological applications which may also result in your company leveraging a service provider's investment in technology- again at no additional cost. In effect, you may end up leveraging the groundwork for your business processes in which your outsourcing provider has already invested a significant sum of money in providing the same service to other companies.

9. & 10. Most importantly- Double Enhanced Productivity: Best in Class and First Mover Companies have learned that there is an increase in their productivity that is, in effect, enhanced in two very important ways:
The utilization of offshore BPO services invariably increases the BPO clients own business productivity in providing their core competencies. By allowing the BPO provider to handle the non-core competencies of their company, they are liberated from those non-core responsibilities and can focus on the delivery of their core functions. Over and above the immense savings that these companies invariably realize, the added benefit of substantially reducing their costs for such services as accounts payable, accounts receivable, customer service and virtually any other service which is repetitive and do not constitute a core function, these organizations are seeing that their ability to service their core customers are dramatically enhanced.

Moreover, those companies who are wise enough to utilize BPO providers to perform there back office functions are experiencing much greater quality of service within those functions that they are outsourcing because the BPO provider is much more proficient in those functions inasmuch as those functions are the core competency of the BPO provider. In other words, the clients back office becomes the BPO providers front office. Therefore, these companys clients are experiencing double enhanced Productivity, i.e. more focus on their core competencies and more efficiency in the servicing of their non-core competencies.

The foregoing are merely ten of many of the significant and company life-changing benefits to Outsourcing your companys non-core competencies to an offshore Provider over and above the significant cost savings your company will realize in such a move. There are many more such benefits. Clearly, those business organizations who have not developed an Offshore Outsourcing Strategy for their non-core business functions, should do so immediately.

The strategic outsourcing partnerships is brought to bear when your outsourcing Provider consistently exceeds expectations to become a valuable partner in your business strategy. The successful Client/Provider outsourcing relationships is built upon a constant evolution of the vendor/client outsourcing relationship into a relationship that provides impressive bottom line value through proven processes, consistent commitment and excellence in effort.

N. Reese Bagwell
Executive Vice President,
Administration
rbagwell@PremierBPO.com
931-551-8888
http://www.PremierBPO.com