Some companies don’t need a reason to outsource to the experts in their field. Others feel that they can get by in their mission by keeping matters in house. All that being said, if you would like your business or organization to achieve more in any of the tasks listed below, you should consider outsourcing to the experts!
The Top Ten Reasons Companies Utilize Outsourcing
1. To improve company focus. Outsourcing sets up a framework that an outside expert assumes responsibility for. That leaves management free to focus on more important business issues related to customer service and marketplace demand.
2. To obtain world-class capabilities. Because of their specialization, outsource providers bring an extensive skill set into the corporate environment. Such leading edge technology and expertise helps companies better satisfy customers and increase productivity.
3. To accelerate re-engineering benefits. Organizations realize the benefits of re-engineering more quickly if they contract with an outside organization that is itself already re-engineered to state-of-the-art standards.
4. To share risks. Outsourcing enables management to turn over to its suppliers certain risks, such as demand variability and capital investments. Unlike the buyer, the outsourcing provider can spread those risks over multiple clients.
5. To free up corporate resources. Outsourcing permits an organization to redirect its resources from non-core activities to ones that have the greatest impact on business performance.
6. To make capital available. Contracting out certain functions as operational expenses can reduce the competition for capital, since the outsourcing entity provides the capital investment as part of its overhead.
7. To obtain a cash infusion. Outsourcing can involve the sale of assets to the provider, typically as a combination of cash and a loan.
8. To control operating costs. Access to an outside provider’s lower cost structure is one of the most compelling reasons for outsourcing.
9. To obtain resources not available internally. Outsourcing is a often viable option for companies experiencing rapid growth, expansion into new geography or spin-offs from the parent company.
10. To deal with management or control problems. Control problems are often cited as the reason for outsourcing. However, the underlying cause, such as unclear expectations or difficulty in measuring performance, is often not solved by outsourcing.
Source: The Outsourcing Institute, 2004
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