04.14.07
Why Outsource?
According to a Deloitte survey cited in an article by Jeana Wong in Channel News Asia, outsourcing is not generating the savings promised. Surprising? No. Actually, to anyone in the business, it is pretty obvious.
Nor are the reasons surprising. In that article, Phua Jer Hong, regional practice leader of Strategy & Ops Advisory at Deloitte Consulting, says:
“Typically, for organisations that outsource, they might have variations in terms of their practices across different regions or perhaps different operating companies. These different practises would mean that they are not able to accept the standardised solution offered by a vendor in a wholesale manner. In other words, the majority of the organisations have yet to realise the cost savings that they are originally entailed or have identified in their business case. They are also putting in place a larger-than-expected retained organisation to manage outsourced vendors, as well as to manage the outsourcing deal itself.”
So, without cost savings, why outsource? Two basic reasons come quickly to mind: capabilities and growth.
Much of today’s large enterprise focus is on shaving costs. Companies are literally spending millions to save millions, shrinking their internal operations, displacing workers and, when all is said and done, still spending too much money. The annual budget ax has become, instead, a budget sawmill, constantly cutting through an organization, paralyzing it as its people, afraid for their own jobs, duck and cover.
Small- to mid-sized businesses (SMBs), already lean by necessity, may be in the best position to benefit from the “right” reasons to outsource. Unlike large enterprises, SMBs growth potential is bound not by market saturation, but by its internal capabilities and market reach. Strategic outsourcing can, if used correctly, expand a company’s capabilities and capacity, allowing it to compete against larger regional and global players in the marketplace.
Unfettered by the budget chainsaw, and the paralysis that accompanies it, SMBs can move with commitment and enthusiasm into new markets - using outsourcing in a manner that helps its people prosper. With the excitement and potential for growth, SMBs can use strategic outsourcing to beat large enterprises at their own game, and can enjoy the true fruits of a global perspective.
