Outsourcing Industry Articles
Outsourcing Article – The Telegraph – October 2009
When it comes to non-core business processes, outsourcing can significantly cut costs as well as provide a wealth of expertise and tangible efficiencies, says Mike Scott…..
Outsourcing has a bad reputation – it is often seen as a way for companies to cut jobs at home and move them somewhere cheaper. However, while cost savings are one of the main reasons for outsourcing, there is far more to the phenomenon than that, says Clarke MacFarlane, MD of Siemens IT Solutions and Services.
The first fields to see outsourcing were in telecommunications and IT, where changing technology left businesses struggling to keep up with developments. One of the big growth areas now is business process outsourcing (BPO). This is the practice of taking operations which, while important, are not at the core of what you do, and letting someone else do them for you.
The possibilities are endless, and include legal and accountancy work, HR, the manning of CCTV control rooms and airline ticketing systems. “The benefit is that clients pass on the risk and the cost of innovation, and get the promise of cost savings”.
“Off shoring is part of the solution, but it would be wrong to assume it is the only method,” says Mr MacFarlane. Indeed, for security and legal reasons, outsources public service processes – for example, the administration of driving licences, must be operated in the UK.
BPO gives access to expertise and scale that do not exist in your own business, explains Martin Hart, chairman of the National Outsourcing Association. BPO providers have the resources to do certain things more efficiently and much cheaper than their clients.
However, there are dangers in too much outsourcing. It is important to know what your company’s core business is, and to safeguard your intellectual property. Mr Hart cites the case of Bowmar, a personal calculator company that outsourced to Texas instruments in the seventies – only to go out of business hen Texas started to produce its own calculators.
As BPO matures, companies are looking to outsource processes further up the value chain, says Dr Marisa Smith of the Centre for Business Process Outsourcing at Strathclyde University. “There is talk now of knowledge process outsourcing, for example risk analysis and even research and development. Scotland is looking to sell itself as a centre of excellence in this area.”
Outsourcing offers the opportunity to make aspects of your business run better. “It gives you the chance to bring some innovation into the company,” says Dr Smith.
Nigel Swycher, a partner at lawyers Olswang agrees. “Innovation is the number one sell for BPO providers,” he says, adding that BPO is best-suited to “anything that requires complexity to be managed in a regular way”.
Take the first step to reducing costs and delivering excellence in your business by talking to VoxPro about our outsourcing solutions