Why Outsourcing?

What is Business Process Outsourcing and what are the benefits?

The term outsourcing is used in various cases, but generally it involves the assignment of a task/activity (usually one that is undertaken by the holder of the activity) to an external partner for execution.

In this way two companies/organisations are bound contractually to carry out one another’s activities in return for a fee.

The ultimate goal for a company is to have loyal and dedicated customers. In order to achieve this goal there must be a balance between the following three components:

  • Quality of product/service
  • Essential customer service
  • Competitive pricing

A good subcontractor may make the difficult task of keeping this balance easier for the following reasons:

  • Outsourcing saves money: an activity is billed and valued for what it actually costs.
  • Outsourcing saves space and energy: operators, machinery, training rooms etc occupy a lot of space and a lot of energy is wasted in order to operate them whether there is work or not. The long-term benefit from the savings is substantial.
  • You can improve your technical support or customer service: A good call center has professional service advisors and their training is focused on providing good service regardless of the occasion. Additionally through the contract the client can bind the provider to comply with his/her own desired service levels and rules.
  • You can take advantage of new technologies: It is difficult for a company, especially when it comes to small and medium enterprises, to follow technology trends mainly due to the high investment cost involved. Through the process of outsourcing companies have access to technology without any initial cost and without having to incur the annual maintenance costs, support etc.
  • Outsourcing provides a competitive advantage: With improved service capabilities (e.g. 24 hour service) as well as quality indicators to be determined, a company can project the image that it intensely cares about its customers regardless of the cost.
  • Manpower savings: Apart from service advisors, a company’s call center also requires shift leaders and supervisors etc. The knowledge and skills of these individuals may be necessary elsewhere in the company.
  • Ease of approach change or implementation of new tactics: The knowledge and experience of providers on issues related to service can now be exploited and the service process can be tailored accordingly.
  • Reallocation of costs: The operating leverage is the comparison tool for fixed cost versus variable cost in a company. With the process of outsourcing promotes the movement from fixed cost towards variable cost while at the same time the variable cost becomes more predictable.
  • Contractual commitment: Quality and efficiency in customer service is no longer just a desire, a goal that is never accomplished, or something expensive to achieve fully. Through a contractual commitment with the service provider, there are legal clauses as well as compensation arising from the non-compliance with the pre-agreed terms.
  • Response to fluctuations of workload: It is definitely easier for a professional call center to respond to large increases or decreases in workload, without affecting the quality of work or increasing the cost permanently.