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12 April 2007
Small and Mid-Sized Businesses are lured by outsourcing to save money and improve efficiencies Outsourcing, once regarded as the exclusive domain of larger, well funded companies, is starting to become an attractive option for small and mid-sized businesses seeking outside capital. So Org Geldenhuys, a director of Pretoria-based IT recrutiment company, Abacus Recruitment. "One of the main advantages of outsourcing is that it is an effective way of using third party partners to perform non-core business tasks so that companies can focus on their unique business strategy - a strategy that is catching on with small to mid-sized companies, who now realise that it need not cost an arm and a leg. Companies are increasingly realising that, when properly executed, outsourcing reduces costs, improves time to market and brings in world class support staff and expertise on demand." Pointing to its growing allure among smaller players, industry analysts estimate that business processing outsourcing to small and middle market companies will grow to more than $25 billion by 2009. According to a press article published recently in New York, the worlds of investment banking and outsourcing are now converging. Wealthy investors, venture capitalists and leading private equity firms are advising, and demanding, that small and medium-sized companies use outsourcing as a strategic tool to ensure that invested dollars are leveraged to their utmost. "These firms - who have the ears of many clients - believe that outsourcing stretches every last dollar, and cent, invested in a company, or spent by a company," said Geldenhuys "What companies need to be cognisant of, however, when approaching a third party to handle their outsourcing, is to ensure that the relationship is well-oiled. There are going to be vendors out there who are not as good as they should be and companies should ensure that they team up with a company that can give them 100% service, that they know the ins and outs of the processes they will be performing, and the industry in which they will be performing these tasks. Outsourcing should also not just be viewed as a way of cutting costs. It can also be regarded as a way of boosting efficiencies so that customer service and satisfaction is elevated. If this is done, the company's coffers will almost certainly become more flush. "Outsourcing may have started as a way of saving money - certainly when times were tough - but this market has now matured and it has moved beyond just a cost-saver. It is a methodology that enables companies to keep an eye on their core operations and not lose sight of day-to-day business drivers due to being side-tracked by non-core issues. It is a way of increasing quality and, with this quality improvement, comes an improvement in the client base, and its willingness to pay more money for services delivered." Research from Gartner shows that, up to 2008, 60% of organisations that outsource customer service and support contact centres with the primary goal of reducing cost, will fail. In addition, the research company believes that by the end of 2007, 70% of the top 15 Indian-owned BPO start-ups that offer customer call centre services will be acquired, merged or marginalised. |