Is outsourcing only for “big” companies?

This article is a submission by VIZX Global. VIZX Global short for Vision Execution, is a BPO solutions provider that was established with a clear vision: to nurture transformative ideas from conception to fruition, ultimately cultivating thriving enterprises.

There is a common misconception that Business Process Outsourcing is only for big businesses. As such, companies are not embracing the benefits that BPOs can deliver to small businesses, especially those that are growing rapidly.

The perception is that outsourcing thrives in a large-scale setup with economies of scale. This thinking results from the former trends where the primary buyers of outsourcing were big companies, but this is a narrow view of outsourcing.

Outsourcing is about getting quality service at a reduced cost. It is also about accessing expertise and skills lacking in your business.

Your business might outsource to cut costs because it does not have room on-site to accommodate the service and its demands. Hence, SMEs stand to benefit from the combination of expertise and capacity when it comes to outsourcing.

This article explores why outsourcing is not just for the “big” players and why small and mid-sized companies should consider this strategy to drive growth and innovation.

The changing business landscape

As stated earlier, the traditional notion that outsourcing is exclusive to large corporations stems from the fact that big companies largely adopted outsourcing practices in the past. Over time, this has evolved into a more dynamic, strategic, and scalable model that fits businesses of all sizes.

The business environment today features technological advancements, shifting consumer expectations, and a constantly changing regulatory landscape.

Hence, for a business to survive and thrive, it must embrace flexibility, focus on its core competencies, and find ways to adapt quickly to new challenges. Outsourcing presents a solution, enabling companies to improve their operational efficiency and remain competitive.

5 advantages of outsourcing for small and medium enterprises (SMEs)

Here are five advantages that SMEs can gain from outsourcing:

1. Cost efficiency

Significant cost savings are one of the strongest arguments in favor of outsourcing. Deloitte’s 2016 Global Outsourcing survey reveals that up to 59% of companies outsource to reduce costs.

SMEs often have limited budgets, making it challenging to maintain large in-house teams or invest in expensive infrastructure. Through outsourcing, an SME can access high-quality services at a fraction of the cost of hiring full-time employees or building internal capabilities.

2. Access to expertise

Outsourcing helps SMEs access specialized expertise that may otherwise be out of reach. Many small companies lack the resources to hire dedicated specialists in data analysis, cybersecurity, or content creation.

Outsourcing these functions allows small businesses to leverage the latest knowledge and technologies without heavy investment in training or hiring full-time experts.

3. Scalability and flexibility

As business demands change, small businesses face the challenge of scaling up and down to meet their needs.

The in-house teams can only handle so much, and the cost of hiring and training additional employees to meet short-term needs may be overwhelming.

Outsourcing offers scalability and flexibility, allowing businesses to adjust quickly to changing conditions. Hence, through outsourcing, a small business can respond to business demands during the peak season and scale down without losses once the season ends.

4. Focus on core competencies

Outsourcing non-core functions enables small businesses to focus on what they do best. By delegating routine or specialized tasks to an outsourcing partner, companies can free up their in-house team and resources to concentrate on their core business functions.

5. Risk management and business continuity

Outsourcing is also critical in risk management and ensuring business continuity. Many SMEs face heightened business risks due to a lack of expertise in managing complex challenges, such as data breaches or compliance with regulatory requirements.

Companies can protect themselves from potential disruptions or costly mistakes by outsourcing to trusted service providers with a track record of managing these risks.

In addition, outsourcing functions, such as IT support services, help ensure that operations continue uninterrupted, even in unexpected events like cyberattacks. This resilience is vital for small businesses looking to protect their operations and trust with customers.

The 3 benefits of outsourcing for large corporations

While outsourcing has proven to be a game-changer for SMEs, it also benefits large enterprises beyond cost savings. These advantages include:

1. Improved efficiency and productivity

Large corporations often operate in multiple regions or have extensive operations, making them more prone to inefficiencies and excessive overhead costs. By outsourcing certain functions, such as payroll, IT management, or logistics, large businesses can reduce operational expenses while maintaining high service standards.

Outsourcing partners bring specialized skills, advanced technologies, and best practices to the table, enabling companies to achieve operational efficiencies that may be difficult to attain in-house.

For example, an outsourcing partner with a strong background in supply chain management could help a multinational corporation optimize its logistics operations, reduce costs, and improve overall performance.

2. Innovation and competitive advantage

For large corporations, staying competitive involves continuous innovation and prompt response to market trends.

By tasking an outsourcing partner with non-core business functions, a business will regain its capacity to focus on high-value tasks such as research and development or market expansion.

Additionally, outsourcing can help large organizations test new ideas, develop prototypes, and experiment with different business models, all while mitigating the risks associated with in-house R&D.

3. Global reach and market expansion

Outsourcing allows large corporations to expand into new markets and geographies with minimal risk. For instance, outsourcing customer support functions to regions with lower labor costs or language skills that match target markets can help global businesses scale quickly.

This international reach also enables large companies to cater to diverse customer bases, offering localized services in different languages, time zones, and currencies.

As a result, outsourcing enables businesses to broaden their scope without establishing a physical presence in every location.

So, why is outsourcing for everyone?

Outsourcing presents opportunities for startups and multinationals looking to stay competitive in a dynamic economy. It does this through operational efficiency, reducing costs, providing access to top-tier talent, and facilitating business expansion and flexibility.

Hence, businesses must explore the outsourcing space to maximize their potential as the global marketplace becomes more interconnected and competitive. Unlike popular misconception, outsourcing is a powerful tool for companies, small and large, at any stage of their growth journey.

Outsourcing is often perceived as a strategy for the big business players, but this view is outdated and limiting. In reality, outsourcing provides substantial benefits to companies of all sizes, from small startups to established enterprises.

By embracing outsourcing, organizations can access cost-effective solutions, specialized expertise, enhanced scalability, and the ability to focus on their core business objectives.

For decision-makers running small businesses or leading large corporations, the question should no longer be whether to outsource. Rather, they must ask how to strategically incorporate outsourcing into their operations to improve efficiency, and remain competitive in an ever-evolving marketplace