Small businesses are always in the need of cutting corners and finding the edge to propel their company to the next level. Simply put, businesses are becoming more aware of outsourcing, researching and finding out the benefits it brings. Outsourcing allows
employees to focus on their core functions without getting bogged down with extra tasks that can be done much more efficiently and inexpensively by other sources.
Companies that consider outsourcing ultimately decide to outsource for many different reasons. Businesses look at outsourcing as a way to lower procurement related costs. However, once companies better understand the magnitude that outsourcing non-core functions brings it comes down to three key objectives:
Improve overall procurement performance (basically achieve greater levels of cost savings on purchased goods and services)
Gain more freedom and flexibility to focus on core competencies while applying limited resources to business functions
Attain greater control and reporting on government compliancy, vendor costs and policies and procedures.
Cost-cutting may not be the only reason to outsource, but it's certainly the top factor. Outsourcing converts fixed costs into variable costs, releasing capital elsewhere and allows businesses to avoid large expenditures in the early stages of your business. Outsourcing can also make companies more attractive to investors, since you're able to drive more capital directly into revenue-producing activities. While companies that do everything themselves have much higher development, marketing, purchasing and distribution expense.
Every business no matter what size has limited resources, and every employee has limited time. Outsourcing helps companies shift its focus from secondary activities to serving the customer and helping managers set their priorities more clearly.
Phil Sperling, partner with Professional Business Systems, an outsourcing firm agrees, “Outsourcing procurement requires a great deal of focus on cost saving, profit maximization and compliance.” Phil continues, “Often good procurement strategies can be the difference between a profitable company and a failed business. Outside provider's cost structure and economy of scale give businesses an important competitive advantage.”
When done for the right reasons, outsourcing will actually help businesses grow and save money. There are other advantages of outsourcing that go beyond money. Smart businesses leaders know they can’t do it all and take advantage of smart outsourcing.