Public Sector Outsources, Your Business Should Too
Posted by Matt Krautstrunk on May 26, 2011 in Business Management, Business News, Business Start Up Advice [ 0 Comments ]
A lot of controversy has been sparked over Costa Mesa, California’s decision to pink slip and potentially outsource more than 200 employee positions, 43% of its workforce. What some people don’t realize is the fact that city council is a business in itself; and the decision to outsource is largely, a sound business decision.
The economy has adversely affected many cities and businesses financial budgets. For some businesses on the ropes, a choice to outsource is primarily to save long-term overhead. Costa Mesa’s future budget includes tie ups in pension and to protect from collapse, outsourcing is one of the only options.
“We’re going to run out of money sometime this year if nothing changes,” said Councilman Eric Bever. Although many people are against outsourcing core city jobs some see the business side. Jeff Jones, a city resident believes, “we need to look at everything. We need to start over. To leave it alone doesn’t make sense.”
This story gives a good case study for us to follow in real-time. Outsourcing jobs within your business may seem irrational, but looking at the ROI makes the decisions much easier.
According to CIO Magazine, 17 to 53 % of businesses have not realized the value that comes from offshore outsourcing. However, still Forrester Research estimates that 3.3 million U.S. jobs and $136 billion in wages could be moved to such countries as India, China, and Russia by 2015.
Your business should at least look into the ROI of business process outsourcing. Whether you are looking to outsource non-revenue generating activities like HR outsourcing and bookkeeping or revenue generating business processes like call center services, you should understand the advantages of outsourcing business processes besides cutting cost.
Leveraging Outsourced Services
Traditionally outsourcing was just used to “get the job done, and out of the way.” However, today outsourcing is becoming more strategic; many services like call centers are becoming aligned with business strategy to improve ROI with cross selling and up selling initiatives. Here are a few common ways businesses are leveraging outsourced services.
- Focus on Revenue Generating Activities– outsourcing fees up your staff to make revenue generating decisions. Shifting your employees to a strategic role helps guide your business and eliminates costly grunt work.
- Improve Quality of Services– Surprisingly many offshore businesses have superior skills and experience in whatever your business process you are outsourcing.
- More Information- Allows you to access a pool of separate information and knowledge.
- Fully Scalable– Outsourcing services are often fully scalable. If your business is growing fast, or needs to cut back, outsourced services will customize a plan for that.
Businesses should learn from Costa Mesa that planning ahead and being proactive about their budgets will give them flexibility for the future.
Instead of this PR nightmare, outsourcing core business processes to work with your staff before a problem will stabilize your growth.
Instead of being left with employee overhead, think about outsourcing for your business.
Image Credit: Fersht