If there has ever been a need for businesses to think outside the box when it comes to cost savings, now is the time. More than two years into a global pandemic that has taken a devastating toll on society, pressure is building on many organizations that have been fortunate to not already drown under the weight of rising expenses, supply chain issues and labor shortages. One only has to look at data released by the Australian Bureau of Statistics in March 2022 to see the impact being felt across the corporate sector.
Almost 40% of all businesses expected to increase their prices more than usual during the next three months, with nearly all (97%) saying they were being driven by rising non-staff related operating expenses. Soaring fuel and energy costs (88%) and increases to the costs of products and services (88%) are putting a huge strain on bottom lines, with two in five businesses reporting their operating expenses had increased during the previous month (compared to less than a quarter at the same time last year).
And the scary thing? Australia is considered a country that has managed the fiscal fallout of the COVID-19 better than most. Across the Pacific Ocean, a Federal Reserve survey of CFOs recently found 80% of U.S. companies were passing on rising costs to consumers as they adjust to a surge of inflation to a 30-year high. The same survey revealed nearly 90% of companies are facing extraordinary cost increases because of supply constraints, with more than 60% expecting the trend to continue until at least the fourth quarter of 2023.
It is a similar story around the globe, with pressures being felt by businesses unrestricted by location, industry or organizational size. Fortunately, many of those companies can tap into a tried and tested cost-saving strategy that is already easing the load on many stressed executives and their wider teams. These are the people who have turned to outsourcing cost savings in what are truly turbulent financial times.
Outsourcing sees tasks that would normally be completed in-house by one’s own employees assigned to a third-party vendor. Such tasks may include a specific project, multiple activities or an entire business function, with outsourcing coming in three location-based types – onshore (partnering with a provider in the same country), nearshore (partnering with a provider in a neighboring or nearby country) or offshore (partnering with a provider in a more distant country).
In the two decades from 2000, the value of the global outsourcing market has more than doubled to an incredible $92.5 billion and that growth is continuing as more and more companies realize the benefits of partnering with quality offshore providers. That is especially so for organizations looking to reduce expenses, with outsourcing delivering cost savings in multiple ways.
Every dollar a company saves via outsourcing is a dollar that can be better directed elsewhere with an organization. While this may well be towards helping improve a profit and loss statement, saving thousands of dollars each month by offshoring can also benefit a business in other ways.
Investing in any of these areas is likely to generate more growth in your business and the best part is, with an offshoring strategy in place, executives will be well positioned to scale their businesses to meet that demand.
Saving money is undoubtedly one of the main reasons businesses turn to outsourcing. In 2020 alone, a study by Deloitte found that 70% of businesses who turned to an outsourcing partner did so for cost reduction. However, to say money is the only benefit would be a gross understatement.
If the cost savings and other benefits of outsourcing seem too good to be true, it is time to explore the practicalities of partnering with an offshore partner. Before rushing into an arrangement though, it is worth considering these handy hints.
Outsourcing represents an opportunity for businesses to do things differently. On the back of the cost savings and productivity increases it generates, it can free up time and funds to be directed elsewhere. You might pass on the savings and offer more competitive rates to your customers, use the extra time and human resources to improve your customer experience or choose to develop new products or break into new markets. At the end of the day, it is a chance to improve your business without losing revenue.
Rapid growth is the goal of most start-up founders but juggling increasing demand with limited resources can create headaches. Discover why smart entrepreneurs are turning to outsourcing as a means to free up themselves and key team members to focus on the areas they specialize in.
This blog was last updated on 22 April 2022.
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