Proponents of outsourcing cite a variety of reasons for "letting others do
it. " Here are some of the most important
Cost savings - By outsourcing functions that were previously performed in house,
companies are often able to reduce their employee levels and related costs,
such as recruitment, supervision, salary and benefits. By outsourcing a capital
intensive function, you can also reduce the costs of equipment obsolescence and
depreciation. A portion of your cost savings will go to the outsourcer, but
outsourcing vendors have a tighter control of fringe benefits and run leaner
overhead structures. They also know how to deal with vendors serving the
function they are providing and therefore, are able to pass on to your company
the benefits derived from bulk purchasing and effective leasing.
Quality of service - Because your company is the outsourcer's customer, you will
likely experience a "can-do attitude," which may not always be
exhibited by an in-house staff.
More capital funds - Outsourcing reduces the need to invest capital in non-core
business functions, thereby freeing capital to invest in profit-making aspects
of the business.
State-of-the-art technology - Outsourcers have to spend time and money on the
most current equipment and on employee training to remain competitive. By
outsourcing certain areas, you are assured of receiving the most efficient
services and the latest technological advances within that particular function.
Price stability - By signing a contract to outsource, you will likely be able to
obtain stable pricing, eliminating the future need to shop around. Stable
pricing allows the company to budget operating expenses and capital purchases
more accurately, while potentially preventing the likelihood of surprise
New business partners - Outsourcers clearly wish to be viewed as your business
partner. And as a business partner, they share in the desire to keep your
company operating at its maximum potential. Through this business partner
arrangement, outsourcers are eager to introduce you to other outsourcers to
assist in that goal.
More time to focus on core business activities - You cannot overlook this
intangible benefit of outsourcing. If a company is to be successful and
profitable, management is needed to spend time planning and directing the
company's business strategies and not wasting time worrying about managing
certain administrative or ancillary functions.