Why is outsourcing popular for businesses? It’s not a new practice, but it has changed a lot since it started.
“Outsourcing practices have long constituted an important part of competitive business strategy.” (Holcombe)
In 1966, the U.S. Naval Academy operated their own milk production facility. They outsourced to third-party producers when they found out they could reduce labor and supply costs. This freed up the Academy to focus on other tasks. I think we can all agree, milking cows isn’t a good use of a Sailor’s time.
In this day and age, contact centers are a good example of outsourcing efficiency. There are four main reasons companies outsource:
- Costs Less – Most outsourcing companies are located outside the U.S. and benefit from lower operating costs that their US-based competition.
- Fewer People – Leave hiring and firing to the outsource partner. It reduces a company’s HR strain
- Company Focus – Businesses can focus on what makes them profitable instead of monotonous paperwork.
- Increased Customer Satisfaction – Companies can provide round the clock customer support with live people taking care of their issues.
Reduced costs are the number one reason companies outsource.
UNLV Researcher Angela Smith says, “It can be financially beneficial for a company to have a service offered to the public where they are paying a fraction of the wages they would if the job were located in the U.S.”
Running a company stateside can be tough. You have to in factor in minimum wage increases, labor unions, inflation, and competitive wages. Partnering with an outsource contact center can take away all those headaches. Outsourced call centers usually have lower per-hour costs than US-based call centers and can scale up or down depending on a customer’s needs.
But how’s the quality of service? Some customers wonder if lower prices reflect poor service. While this used to be true, outsourced contact centers have transformed dramatically over the years.
“A recent trend is of the outsourcing of jobs involving a higher skill level,” says Henrey Fennell, Researcher at the University of Tennessee, Knoxville.
Companies now outsource graphic design, IT, and other “high-skill” jobs.
“Business structures have responded to changes in technology and economic conditions by relying on outside entities to perform various functions,” says University of Pennsylvania Researcher Justin Holcombe. “This transfer of formerly internal functions is central to most discussions of outsourcing.”
Training, technology, and a desire to keep up with other companies have led to higher-skilled outsourcing. By offering higher-skill work cheaper, offshore companies are able to stay competitive. These call centers and other services are now highly skilled and are a much cheaper option to those in the United States. In fact, according to Smith, “Some comparable services are a fraction of the price…”
Outsourcing can also make a company more flexible.
“Companies looking to improve their efficiency in the global economy use contact centers to reduce costs and increase flexibility by unbundling their corporate functions: human resource management, customer support, accounting and finance, procurement operations, and more,” says Duke Researcher Karina Fernandez Stark. “This reduced the burden of support activities has allowed firms to focus on their core business.”
Outsourcing to a highly skilled contact center can reduce stress and create more time and energy to focus on business. Finding a trusted partner is vital to getting the most out of the outsourcing service. It’s important to find an outsourcing partner that can provide the highest quality service.
Another component of flexibility is 24/7 customer support.
“In some situations, businesses seek offshore outsourcing arrangements for reasons other than securing low-cost labor. One such reason is the ease of “operating on a 24-hour, 7-day schedule across numerous time zones,” says Holcombe. “This convenience is perfect for both clients and the company that is outsourcing their work.”
For many companies, staff sizes grow or shrink based on consumer demand. Outsourced contact centers can flex depending on need. Why pay for the expensive overhead when demand is low? Grow your support with your business. Don’t get stuck with the bill when business slumps.
The results are in: outsourcing is here to stay for companies looking to stay competitive in the global economy. Have you found a trusted partner? Why not give Centris Information Services a try? We’re a nearshore customer contact center focused on bilingual call center and support services. We’re based in Texas with major operations in Monterrey, Mexico.
References
Westner, Markus. “Information Systems Offshoring: A Review of the Literature.” Faculty of Economics and Computer Science (2007): 25. JURN. Web. 21 Nov. 2016.
Fennell, Henry D. “E Importance of Outsourcing and Offshoring in the United States.” Tennessee Research and Creative Exchange (2007): 9. JURN. Web. 21 Nov. 2016.
Smith, Angela. “The Pros and Cons of Outsourcing.” UNLV Theses, Dissertations, Professional Papers, and Capstones (2012): 2. JURN. Web. 21 Nov. 2016.
Holcombe, Justin K. “Using the Law, Market, International Mechanism, and Collective Organization as Building Blocks.” Solutions For Regulating Offshore Outsourcing In The Service Sector (n.d.): 541. JURN. Web. 21 Nov. 2016.
Stark, Karina Fernandez, Penny Bamber, and Gary Gereffi. “The Offshore Services Value Chain: Upgrading Trajectories in Developing Countries.” International Journal of Technological Learning, Innovation and Development 4.1/2/3 (2011): 207. JURN. Web. 21 Nov. 2016.
Giao, Paulo Roberto, Moacir De Miranda Oliveira Junior, and Eduardo Pinheiro Gondim De Vasconcellos. “Services Offshoring and Its Strategic Effects on Value Chains.” BAR, Braz. Adm. Rev. BAR. Brazilian Administration Review 5.3 (2008): 1. JURN. Web. 21 Nov. 2016.
