What is outsourcing?
Outsourcing is a way in which companies entrust the processes of their business functions to external vendors. Businesses can choose to contract to an outside party to perform certain tasks instead of assigning these duties to existing staff or hiring new staff. It's a popular way for businesses to build capacity or streamline operations enabling them to focus on their core business and reduce costs while maximising productivity and maintaining quality.
Business Process Outsourcing (BPO) is the general term for the outsourcing of a specific task of a business process, such as contact centre operations. BPO is often divided into two categories: a BPO back office, which includes internal business functions such as data processing, training or quality assurance, and a BPO front office, which includes customer related services such as collections or customer service.Why do companies outsource?
Outsourcing is not a new concept, but it has been underutilised in some countries, including South Africa. Managing change, improving customer service, maximising efficiency and remaining agile are all among the most pressing challenges facing businesses today.
Outsourcing allows businesses to access a much larger, flexible workforce enabling them to meet these challenges. This can greatly decrease response time to external challenges such as Covid-19 as well as managing peaks and troughs in demand. It can even allow new initiatives to be deployed in record time without affecting your existing staff capacity. Over and above this, it provides leadership with the space and time to focus on meeting core business objectives whilst ensuring the customer experience is not compromised.The 5 core benefits of outsourcing1. Cost control and savings
The most obvious benefit of outsourcing is cost saving. In short, the job gets done at a lower cost but still to a high degree of quality. By outsourcing your work to a partner, you can benefit from their economies of scale. Any required infrastructure is covered by the outsourcing partner which is one less cost for your business to carry. Additionally, you remove the costs of recruitment and retention, onboarding, employee benefits, office space and equipment.2. Efficiency
Having access to a larger workforce will naturally increase the pace with which tasks are completed and services are rolled out to customers. Your chosen outsourcing partner will likely have years of experience and a higher level of expertise in the function allocated to them. This results in better efficiency and higher levels of productivity that will impact your bottom line. 3. Niche expertise and talent
An outsource partner has expertise that may not exist within your business. This is particularly true of niche skills such as customer service, customer management and contact centres. Very often, a specialist BPO partner would handle these types of functions better than your internal staff would without a large training bill. This is backed up by more extensive experience in performing complex functions. As your company grows and expands, your outsource partner can continue to provide you with access to a larger talent pool consisting of specialists with various language skills, industry skills etc. 4. Improve customer service
An outsource partner may have staff that work in shifts around the clock meaning that you could operate 24/7. The services that you provide can be delivered at a quicker pace – by having a larger team at work – and to a higher degree of quality as BPO partners train their teams to work according to industry best practices. This all results in improved customer experience and boosts lotalty and retention.5. Technology & infrastructure
Many businesses choose an outsource partner based on their access to new technology platforms. This allows businesses to make use of these platforms without having to invest themselves. While this is another cost saving win, the additional benefit is that the outsource partner has staff who are already proficient in using these platforms. When it comes to existing technology or IT infrastructure, most outsource partners such as Sigma can work with your existing platforms, software, or system – or even bring in new systems for integration.The 5 strategic benefits of outsourcing1. Testing and pilots
Outsourcing allows businesses to test or pilot new initiatives with minimal risk. These pilots can be fully deployed to measure feasibility and long-term potential without the upfront investment in new infrastructure, equipment, or human capital. 2. Time saving
As your business grows, the focus on core functions becomes fragmented as the need to spend time on additional, non-core functions increases. Business process outsourcing will free up time and energy to allow you to focus on business strategy and growth management.3. Added managerial capacity
An outsource partner can fill management gaps that would otherwise require significant restructuring and investment. Departments that experience accelerated growth need firmer management and control. With this function outsourced, your outsource partner would bring tighter control and better delivery for customers. 4. Measurable performance and quality
An outsource partner provides you and your end customers with the best possible service to achieve mutual success. They will provide you with reports around key performance indicators which allows you to make key, data driven decisions to improve your business. 5. Business continuity and risk management
Business continuity and maintaining service delivery levels has become even more challenging with the advent of the Covid-19 pandemic. Outsourcing can help maintain consistency and lower your risk by cultivating a positive customer perception of a large, stable and responsive operation. Outsourcing also means that your BPO partner shares the risk of any new initiative with you.Get endless capacity and flexibility to keep up in an everchanging world. Visit sigmaconnected.com to find out more.