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5 Advantages of Outsourcing for SMEs

by: Mary Christine Galang

Wednesday, August 23, 2017 |

The outsourcing industry has been a strong economic driver for many countries across the globe, particularly in India and the Philippines and many businesses have long since taken advantage of it. From simple back office jobs to knowledge and information sectors, there is no undermining the rise in demand and variation of services being outsourced.

Nowadays, outsourcing is not limited to larger companies. Due to technological innovations and continuous changes in policies and regulations, small- and medium-sized enterprises (SMEs) are now also facing a more challenging operating environment.

The focus for most SMEs (and startups as well) is to ensure that their business cultivates a high competitive advantage. For this reason, outsourcing has become a popular choice.

Outsourcing advantages

To break down, here are five advantages of outsourcing for SMEs:

  1. Lower costs. This is the number one reason why many companies, big or small, choose to outsource in-house functions. You can avoid large expenditures such as equipment, renting or buying office space, as well as traditional manpower costs like employee benefits. Your savings on fixed costs can be directed instead to variable costs, allowing your business to allocate your capital to revenue-producing activities.
  2. Work efficiency. Primarily, outsourcing ensures continuity of operations, which cuts on delays. But its most important time-driven advantage is that time-consuming tasks can be passed on to your outsourcing partner.
  3. More focus. In relation to the aforementioned factor, SMEs who usually multitask in order to meet with operational demands can now focus on developing their strategies and core competencies.
  4. Access to experts. Outsourcing companies are staffed with highly competent, trained personnel that often specialize in niche or various fields who can substantially improve your company’s performance.
  5. Reduce risk exposure. A crucial factor in any project of any scale is risk assessment and analysis. Seasoned outsourcing companies handle and manage this for you. Furthermore, they can also act as your advisor in terms of risk reduction and mitigation.

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