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Outsourcing — Key to Overcoming Economic Challenges

Outsourcing — Key to Overcoming Economic Challenges
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The UK has experienced some difficult economic times, and many forecasters remain pessimistic about the future. A common view is that the sluggish growth that has characterised much of the twenty-first century is likely to continue for some time yet. This has created even more pressure for businesses. Customers, themselves responding to the pessimism, want high-quality services and low prices. Investors, including the business owners, want a return on their investment. And businesses must balance these demands while navigating uncertain times.

After a period during which businesses abandoned outsourcing plans or did not renew contacts, outsourcing in the UK is, again, being seen as part of the solution for businesses. A major factor behind that is the cost saving that outsourcing in the UK can provide. Typically, a business can expect to see savings of between 10 and 15% when compared to their own in-house operations.

However, considering outsourcing purely on price may be the wrong way to go. The concept of outsourcing got off to a rocky start, largely because cost was the determining factor. Consequently, many businesses found themselves in contracts that did not put a sufficient focus on customers, often with providers that simply couldn’t afford to adequately meet the service level required at the price they had negotiated.

In practice, though, there’s no reason businesses can’t realise a saving while also seeing improved customer service. Like any specialist providers, companies offering outsourcing in the UK can leverage several advantages when it comes to providing their services.

The first is scale. This is a key factor behind the savings; most providers will have several clients, and the overhead costs for physical premises, infrastructure, and administration (HR, supervision, and management) can be shared. However, it also means that the providers themselves benefit. The outsourced service, their core product, will always be the priority for investment, ensuring they work with the best facilities. Their support teams, whether HR, legal, or finance, will all be able to focus on outsourcing related needs, rather than being generalists for a whole business. Being large, they can be a more attractive option for potential staff, with better training and development offers and, in turn, better retention. And since they will gain better and more experienced staff, they can offer a better service.

The net result of a good outsourcing decision should be happier customers. Like any expert service, the outsourcing provider, specialising in the functions they provide, will be better than an ancillary function offered by the contracting company. A business that has successfully outsourced functions will see increases in their customer satisfaction and net promoter scores. This, in turn, is likely to offer an additional benefit, on top of the initial savings, to the company’s profit as customers return or recommend the business to friends.

Ralf Ellspermann has over twenty years’ experience working in the outsourcing sector and is currently CEO of Manila-based PITON-Global. Ralf has seen the difference it can make. “We frequently get enquiries from businesses that got their outsourcing wrong,” he says. “The problem is usually getting carried away with the price instead of focusing on customer service.” Taking a customer-first approach is second nature for many businesses, but some will forget this when considering their outsourcing. “The irony,” continued Ellspermann, “is that businesses can have both, saving up to 15% with UK providers and up to 50% if they offshore to the Philippines, while still securing a premier provider that will leave their customers as delighted with the service as the business is with the savings.”

Source: London Issue