Top Reasons Companies are Broadening Their Approach to Outsourcing

Traditionally, outsourcing has been viewed merely as a cost-saving tactic. But nowadays, this strategy has become more a strategic and effective business strategy that brings added-value to the company.

In fact, the 2016 Global Outsourcing Survey from Deloitte indicates that more companies are viewing outsourced service providers as ‘key business enablers’ that helps them achieve innovation and enable transformation – rather than just a source of cost-benefits.

Due to rapidly changing technology, organisations are looking for faster, more efficient and agile delivery of services that enable business transformation. That is one of the main reasons why most forward-thinking business executives now see the role of outsourcing as one which enables organisations to transform their business to become globally competitive.

Here are the other key insights from the research to better understand why outsourcing is no longer just a cost-saving tactic but is now a means and catalyst of change and transformation.

  1. To Foster Innovation That Enable Business FunctionsTo Foster Innovation That Enable Business Functions

Respondents of the survey state that the business market is looking to innovate the outsourcing process so that it can yield benefits beyond what a typical outsourcing agreement offers. The central focus of value is how innovation can act as an enabler of the business function. This has become a pervasive ambition but is often vague in its realisation as the market continues to struggle to define what innovation is.

In reality, this innovation takes place by enabling organisations to buy “module” of service that can be effectively procured, integrated, used for a period of time, and then safely removed it from the internal process when the need to augment a particular business function expires.

Taking this approach in outsourcing can help organisations maintain and improve competitive advantage.

  1. To Derive the Full Potential of the Outsourcing Relationship

Additionally, respondents of the research state that changing the way they see outsourcing process is a key component of the value they get from their existing outsourcing relationship. Ensuring the benefits of an outsourcing partnership begins early in the outsourcing lifecycle. Therefore, it is imperative to start the outsourcing relationship right from the start in order to set the stage for the outsourcing solution effectively.

  1. To Effectively Manage the Outsourced Service Providers

To Effectively Manage the Outsourced Service Providers

Once the service provider has been engaged, the next is the transition stage and then managing the vendor relationship. According to the survey, the desired outcomes in an outsourcing partnership can be achieved more effectively when organisations spend more time on competitive vendor selection and transition and drafting better Service Level Agreements (SLAs).

Although some companies put so much emphasis on doing business with a low-cost service provider, more and more are looking a partner that can help make a positive impact in business and help them throughout the outsourcing journey. That’s the reason it is essential that companies and their outsourcing service provider must work very closely to design a new technology framework that can result in innovation, improve service delivery and deliver better ROI.

  1. To Achieve Operational Excellence

Lastly, a clear link remains between operational excellence and governance-model maturity. A growing number of companies are broadening their approach to outsourcing by reinforcing their vendor management and relationship management capabilities. This enables them to use contractual levers and oversight activities, such as implementing clear and mature escalation paths, to resolve vendor performance and disputes rather than triggering termination rights.

Companies that regard outsourcing not only as a cost saving but as an effective business strategy that brings value to the organisations are the ones that will most likely win in the marketplace. That said, whenever you decide to partner with a new outsourcing company,  make sure that you and the outsourcing provider are willing to do everything to achieve the business goals and work seamlessly with people and process. Further, one needs to build a strong relationship and alignment with all the relevant stakeholders to get everyone on board with a goal to make the transformation work and deliver a real business value.

Contact Global Outsourcing today to learn more about our offshore outsourcing solutions in the Philippines.