Corporate entities might soon arrive at the conclusion that outsourcing some of their business functions is the best way to boost efficiency and cut costs. Following the heavy impact COVID-19 has left on the global economy, governments and sectors around the world are looking for ways to reduce spending. Corporations have to make sacrifices and let many employees go, making it clear that every budgeted item must be a calculated, strategic move. Outsourced benefits can be best described as tasks and requirements businesses need and cannot function without, and as items that might derail businesses from focusing on their core expertise, especially at a time when the primary focus must be on strategy, business innovation and reshaping both external and internal business structures.
Majority of companies today outsource some of their business functions, with IT services leading the charge. Companies that still have not outsourced are assessing feasibility to outsource while others are increasing their pace of outsourcing. Most often, services that are outsourced are in line with domains where talent is short. IT is a great example of this, considering the tech talent shortage. Outsourcing, in this case, solves many problems including cutting software development costs and utilizing specialists.
In the era of the pandemic, tech giants compete for who can last longer working from home, proving that the model of large, physical offices is rapidly evolving towards more dynamic arrangements. There is the obvious question of the importance of interpersonal relationships through physical workspace for team building and overall business success, but at the same time there are very real examples of juggernauts of technology that were started by remote teams, such as WhatsApp and Pricena. For WhatsApp, the case involved hiring an offshore software development team in Russia. As a startup, the now-global hit kept costs down by outsourcing to create its product, while in the US, the teams managed operations and focused on customer support.
Post-lockdown economy will inevitably provide unique challenges and opportunities in the overall work environment and delivery. As a result, businesses are redefining strategies to reap the benefits of a dipping market and build long term strategic assets amidst the chaos. Simultaneously, plenty of newcomers are taking advantage of the trimmed-down competition to enter the market. These small enterprises will need to introduce innovative solutions to address existing market challenges as well as maintain their agility as a strategic advantage. This is where outsourcing creates value through a service which allows them to focus on strategy and niche offerings. Your outsourcing partner deals with aspects of the business that often require entire teams to administer, while you deal with the intricacies of core business delivery in which your specialization creates real value.
If you are doing business in the age of information, you will want your finance function to be outsourced. The finance function is critical to any business and has increasingly become a strategic area providing insights which, if utilized in a timely manner, can be the difference between success and failure. Repetitive processes within finance are prime examples of areas that can be outsourced. Bookkeeping, invoicing and accounting are examples of key activities required by corporations. Today, instead of hiring departments-worth of employees for each of these operations, enterprises outsource entire financial operations. This allows them to allocate resources internally to higher functions such as analysis, forecasting and reporting.
Another great example of business processes that can be outsourced is Human Resources (HR). HR is a business in itself and a crucial vertical among the constituents of business. The HR function has evolved immensely in the past decade to being more than just people management. Successful HR departments are creating value through employee engagement, rapid analytics and reporting which are essential to staying agile and for quick strategic changes. The importance of Human Resources came to the spotlight recently in Saudi Arabia, when an HR ministry was formed resulting from a merger between the Ministry of Civil Service and the Ministry of Labor and Social Development. The Ministry of Human Resources and Social Development currently helps check points off of the Vision 2030 list, and was a key player in the COVID-19 response initiative. Most companies are likely to outsource HR as it requires its own expertise and experience, especially with elements like operational design, payroll and staffing.
Today, it has become increasingly important for organizations to stay abreast with the ongoing changes as technology reigns all areas of our work. Financial reporting, dashboards, payroll, leave management, administration of benefits and recruiting are on an expanding list of business processes that can be outsourced. When outsourcing becomes an automated practice, entities and partnerships are able to conduct more efficient business processes. This in turn minimizes stress linked to repetitive or complicated operational elements which CEOs, business owners and managers need to break away from to focus on business goals. Thus with the ongoing digitalization, virtual work and increased access to outsourcing, we now have access to business tools that can maximize value creation.