Companies that are ahead of their time are the ones that make the most profits and set an example as leaders for their rivals to follow. Companies today are not outsourcing just for the cost benefits, but have woken up to the fact that there is much more to it than cost savings.
Studies reveal that companies outsource various strategic business activities to suppliers in developing countries like India, “best-in-class” companies reaped far more benefits beyond cost savings than “industry average” companies or “stragglers”.
These successful subcontractors also agree that “seeing beyond cost savings in outsourcing is strategically beneficial to both buyers and sellers of outsourcing services.”
Top 5 benefits of outsourcing:
1. Improve competitive advantage
Operating a global demand and supply chain is becoming increasingly complex in today’s competitive environment. By outsourcing strategically decided activities, an organization can deliver its projects more effectively than its competitors, thus outperforming them. This means that they are at the forefront in four areas: customer responsiveness, innovation, quality and efficiency.
2. Increase shareholder value
Outsourcing helps build capabilities and preserve capital investment. As outsourcing reduces the need to invest capital funds in infrastructure and human resources from non-core business functions, these funds can be diverted into strategic business expansion. This ultimately results in an increase in shareholder value.
3. Access to new markets
By entering new geographies, companies can fend off competition from local players. Outsourcing provides access to offshore resources with world-class capabilities that have already worked and gained experience working with many clients facing similar challenges in these geographies. This reduces the company’s effort in searching for technologies (such as Revit/BIM), methodologies (local codes and standards) and trained people.
4. Get tighter deadlines
As the outsourcing company acts as a virtual extension of its client’s internal team, it helps the client bid on projects with challenging deadlines. This can be achieved without compromising the quality of the work done by the foreign team.
5. Handle more projects
By choosing to outsource, an organization’s internal resources are freed up for other core activities, allowing them to redirect these people to higher value-added activities, like winning new projects and spending more time with their clients. This results in increased project management and satisfied end customers, and therefore a reason for repeat business.
Thus, we have seen that while cost has always been the motivation behind outsourcing in the past, in today’s competitive world, outsourcing goes beyond cost cutting. These were some of the top-rated reasons to outsource, aside from cost benefits.
As Mr. Lee Kuan Yew rightly said, “If you forgo outsourcing and your competitors don’t, you’re out of business.”
Indian ESO (Engineering Services Outsourcing) companies like Blue Star Design & Engineering with business offices in UK, US and Middle East have been successful in providing outsourced services to some of the big MEP consultants /M&E worldwide. To enhance its reach in non-continental Europe, Blue Star Design & Engineering has also partnered with local business partners in France, Germany and the Netherlands.
