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Key Benefits of Outsourcing

by: Sarah Joson

Tuesday, September 25, 2012 | Outsourcing News |

Benefits of Outsourcing

Gery Menegaz, an executive IT architect for IBM, recounts his experience of outsourcing IT in an article at ZDNet.com. He said back in the day, cost reduction was the primary reason organizations outsourced some of their processes to the extent of putting up virtual offices in as far as India. But as the price of subcontracting to India increased over the years, the cost saving premise was soon gone.

Moreover, outsourcing wasn’t considered as a feasible long-term strategy as businesses are only fixated on acquiring the services of less expensive contractors.

Menegaz said in his experience working in the IT outsourcing industry, providers were seen as partners that will add value to the company’s processes by adding flexibility and initiating innovation.  After a recent survey, he was able to determine that the pros and cons of outsourcing are still 50/50.

To maximize the benefits of outsourcing, organizations as well as providers should look into the details of the project, and customize a strategy that will benefit, if not optimize, all the departments of the company.

Meanwhile, here are three reasons that make outsourcing a highly sought after process by many businesses:

Outsourcing is still cost-effective.
A good example is the CEMEX outsourcing deal which involves finance, accounting, and human resource functions and was closed by IBM. According to a press release, CEMEX was able to save nearly US$1 billion throughout the duration of the contract. The operation was also successful in improving internal processes and business agility.

Outsourcing enables the company to adapt more efficiently.
Outsourcing is a great way to resolve problems brought about by the constant change in technology, market behaviour, and fewer resources.

Outsourcing gives businesses an opportunity to work with a larger group of skilled workforce.

Another reason that’s driving businesses to outsource is the fact that the specific skill they are looking for is not available locally or is far more expensive. Also, the technology they need might not be available internally.

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