The TOP Reasons Growing Companies Outsource – Part 1 of a 5 Part Series

I think many of you will agree – outsourcing has changed the global business landscape. Not long ago, outsourcing was simply viewed as a means to reduce various operational costs. However, as competition increases and budgets grow tighter, smart organizations are turning to outsourcing to add value beyond finding ways to lower costs.

In recent years, five specific reasons have emerged as the most important factors companies consider when choosing to outsource. Implementing a clear strategy and goal structure for each of these five categories can help any small business make intelligent decisions, and maximize its relationship with the outsourcing partners.

We’ll cover all five in an educational series entitled: “The TOP 5 Reasons Growing Companies Outsource”

Look for these 5 extremely resourceful reasons, starting with:

1) Lower Costs

Reducing cost remains the number-one reason that organizations elect to outsource. Virtually every company cites lowering costs as a primary driver. According to industry analysts at Gartner Group, 80 percent of companies name cost-cutting as the main reason for outsourcing.

The Duke University study of the Fortune 500 found that 63 percent of respondents achieved greater than 30 percent annual savings. Fourteen percent reported savings greater than 50 percent. This finding matched company expectations. Eighty-eight percent expected to save more than 20 percent by outsourcing, while 55 percent expected to bank 30 percent.

For example, an online company can begin outsourcing primarily as a cost-reduction initiative. Many companies will internally run a large call center operation that generates great results, but at a high cost. Under pressure to reduce costs across all functions, they would need to begin outsourcing.

As that company becomes more comfortable with outsourcing, and begins to see the results comparable to their internal efforts, it may be best to begin outsourcing other operations of their business – such as marketing initiatives or IT support. Leveraging resources in this manner can save your business thousands of dollars a year without diminishing quality of service.

Stay tuned – more coming up…

2) Lack of Internal Expertise