Today, it is not only high volume, repetitive, manual, and time-consuming tasks that are outsourced, even strategic tasks having competitive advantage are also being offloaded to outside third parties for achieving higher profits as in the case of contract research and contract manufacturing organizations (CRO/CMO) in the pharmaceutical industry.
When any business begins to grow, it can be difficult to manage everything in-house. Outsourcing allows businesses the time and resources necessary for focusing on other more important aspects of the company, while still offering customers high-quality products and services for enhanced business profitability.
Previously, it used to be non-core business functions that used to be outsourced in most cases. However, as the definition of core and non-core business functions are getting subjective, the outsourced functions are normally varying from business to business. However, a business can opt for the following six key business functions for outsourcing for clocking higher profit margins.
HR OUTSOURCING
Some HR functions are time-consuming and repetitive and put a huge cost burden on a company. To save money and time, you can enter into a contractual agreement with an external third-party provider whereby you transfer the responsibility of managing certain HR functions to the outside party. Many types of HR outsourcing options are available to you today.
Training, counseling, recruiting, and administering are some of the functions that many organizations prefer to outsource for reducing costs. Professional HR outsourcing services due to their expertise in this field and access to the latest technologies can even automate these HR functions and provide high-quality services at a significantly lower cost.
ACCOUNTING & BOOKKEEPING OUTSOURCING
Accounting and bookkeeping outsourcing is an arrangement where an external team of skilled accountants carry out the entire accounting tasks and provide a complete accounting and bookkeeping solution.
Setting up a skilled in-house accounting team can be expensive and difficult, and many companies opt for outsourcing this business function. The standard accounting services that are outsourced are Payroll processing, Bookkeeping Services, Tax returns filing, Financial statement preparation, Invoice processing, Financial planning & analysis, Cash flow management and Accounts receivable and payable management.
Besides cost savings, other top benefits of outsourcing accounting are an industry trend and one of the most popularly outsourced functions for SMEs. Businesses benefit a lot from outsourced finance and accounting services due to lower operating costs, improved accuracy and effectiveness of finance and accounting data, better financial decision making, and zero regulatory non-compliance. It is projected that over the next 4-5 years, the market for finance and accounting outsourcing globally would grow to USD 53.4 billion at a CAGR of 5.9%.
Today new age digital technologies have significantly eliminated most of the manual accounting tasks and made finance and accounting processes more simplified and automated. When outsourced, SMEs can have access to such technologies at a lower cost than arranging infrastructure and resources internally for the needed technological tools. Most of the IT services are outsourced by banking and financial institutions and toward upgrading and automating finance and accounting functions.
Outsourced accounting and finance can result in huge monetary savings for SMEs besides saving time, reducing financial paperwork, and better utilization of human capital. The top benefits of outsourcing accounting services include reduced compliance risks, time-saving, scalability, automation, and advisory.
MARKETING OUTSOURCING
When in-house marketing skills and talents are scarce and your marketing team is struggling to make the marketing campaigns to fruition, outsourcing marketing tasks to a specialist third party can take off huge operational pressures your team might be enduring. Marketing normally involves lots of different tasks stretching from advertising, content creation, campaign management, tracking effectiveness, and many more.
However, to be effective, marketing needs to be innovative and engaging, and when outsourced can connect you with marketing agencies who specialize in keeping on top of new technology and trends.
Marketing outsourcing can help you get an outsider’s perspective of your business and bring new and exciting marketing ideas. A salaried in-house marketing team is expensive and in the case of outsourcing you only need a budget when it’s necessary.
Outsourced marketing services can provide you with marketing software that can automate and schedule various tasks, such as content creation, email marketing, and social media posting to name a few.
IT OUTSOURCING
IT outsourcing is defined as a practice where an external service provider is engaged to deliver some or all of the IT functions required by a business including managing infrastructure, preparing strategy, and running the service desk.
IT outsourcing is common for small businesses that don’t have the ability and affordability to manage an in-house IT staff and infrastructure. Outsourced IT firms due to their skills, resources, and expertise can often offer more efficient services than in-house IT teams and can manage a wide spectrum of IT tasks.
ADMINISTRATIVE TASKS OUTSOURCING
Effective management of administrative tasks needs lots of time and organizational skills and usually includes scheduling appointments, answering customer queries, appeasing dissatisfied customers, receiving orders, and many other communication tasks.
Outsourcing these administrative tasks to an independent contractor or virtual assistant can help you eliminate manpower costs.
THE TAKEAWAY
Outsourcing always brings a competitive advantage through cost reduction, enhanced staffing flexibility, and time savings. Outsourcing business functions is a rising trend and businesses expect to spend billions of dollars annually on outsourcing.
However, there is one note of caution when services are outsourced. Frequently changing outsourced service providers can disrupt business continuity. Secondly, a company is more likely to build a strong relationship with its outsourcing service provider when working with the same team for a longer period resulting in an increased commitment and trust.
