Outsourcing is a powerful business tool used by millions of companies all over the world. Here's a closer look at the advantages of outsourcing:
- Cost Savings
Lower costs have always been the primary outsourcing advantage. Direct savings are made by the cost difference in salaries, benefits, and operational expenses between most Western countries and offshore destinations like India, China, and the Philippines. Indirect cost savings are often derived from the client's ability to refocus on its core business and outsource secondary processes to a specialized external provider.
Outsourcing gives you access to knowledge pools that you might not have inside your own company. Instead of trying to build your own creative design department, you can, for instance, outsource your web design and marketing materials development to specialized agencies. In the old economy, big companies had their own departments for every business requirement. In the network economy, companies go back to their core business and use a network of external partners to take care of the rest.
In certain sectors, it can be very hard to find highly skilled people who are willing to join your company. A good example is the ICT sector. Not a lot of small businesses will be able to find and afford seasoned .NET developers. Outsourcing provides a channel through which business can find readily available high-level expertise at affordable rates.
- Flexible Capacity Management
Outsourcing enables your company to manage its capacity and staff. The task of hiring personnel is passed on to an external provider with whom you can work out a deal based on a certain output quantity/quality, a certain number of hours, or any other type of commitment.
- Time Zone Coverage
By using external providers, you can cover time zones that are not covered by your domestic operation. Offshoring destinations like the Philippines have a workforce that is willing to work during non-regular office hours. Setting up a 24/7/365 operation is generally easier offshore.