- August 5, 2021
- Posted by: dexnovaconsulting
- Category: Articles
BUSINESS PROCESS OUTSOURCING AND ORGANISATION’S PROFITABILITY
The primary goal of every organisation is to make a profit. Every activity an organisation is involved in, can directly or indirectly affect an organisation’s bottom line, affecting its growth.
Businesses constantly strive to improve on their services, they implement new ideas just to increase or shore up their profit base. Cutting down on expenditure is also necessary to achieve a positive bottom line.
Profit ensures the business remains afloat, attracts investment, expands the organisation’s activities amongst fulfilling other needs. To achieve the primary goal of an organisation, it has become essential to consider business process outsourcing.
In today’s dynamic and highly competitive business environment, many companies from small enterprises to large corporations outsource their business processes as new and innovative services and products become available.
There are two main areas where companies can adopt business process outsourcing, they are in back office and front office operations. Back office business process outsourcing is when a company contract its business support operations such as HR, accounting , Information technology services, legal to third party organizations so that core business activities can run smoothly. In contrast, front office business process outsourcing is when company contract customer-related activities such as tech support, sales, and marketing to a third party company.
When an organisation hands over the management of some of its activities – necessary activities that add value – to non-permanent staff over an extended period and managed by an outsourcing firm, it helps increase its profitability.
Here are some of the ways that business process outsourcing makes this possible.
Prioritizing Key Business Operations: While many organisations have their key business operations, some are also involved in other minor businesses. Too many activities can compromise an organisation’s mission, distracting it from its core business operations, thus reducing its profitability.
Business process outsourcing affords organizations greater operational flexibility. When organizations outsource administive, non-core activities to third party companies , they can re-allocate time and resources to core business activities like product development and customer relations, which ultimately gives them advantages over competing organizations in the same industry.
Tackling New Opportunities: every business is on the lookout for new opportunities they can profit from, guaranteeing business continuity. Lack of expertise for such opportunities and unavailability of time to devote to new opportunities are some of the reasons why businesses do not consider many opportunities.
Outsourcing can ensure an organisation gets the right experts – for the duration of that particular project – to turn an opportunity into a successful venture, without losing focus of the organisation’s main operations, and without an organisation committing to employing new permanent staff.
Lower Labour Expenses: outsourced staff come at a much lower cost than the permanent staff of an organisation. With staff outsourcing, an organisation saves resources in bonuses and other benefits that permanent staff are entitled to. These resources reduce an organisation’s expenditure, therefore increasing its profit.
Employing the Right Personnel: organisations sometimes end up hiring incompetent workers which affect their output in different ways, resulting in loss of resources. Staff outsourcing checks this problem as non-permanent staff are vetted on the job before being employed by the organisation.
Reduces Workload, Increases Proficiency and Output: hiring non-permanent staff through outsourcing to share the workload can help an organisation increase its proficiency and output as set targets, necessary for achieving a positive bottom line, are met in record time.
Reduces Investment in Infrastructure: some projects require investment in infrastructure and technology. But outsourcing can help an organisation save costs from capital investment and maintenance cost. This goes a long way to reduce expenditure, thus, increasing an organisation’s profit margin.
Reduces Incubation Period: it takes time and resources to turn ideas into products and services. But new and innovative ideas are important to grow customer base and increase profit. Outsourcing reduces the incubation period for new ideas to transform into products and services, thus saving the organisation money.
The world over, businesses are embracing ideas to reduce their overhead. Profit is the only guaranty for business continuity and expansion. Business process outsourcing is beneficial to save costs while increasing profit.
Whether you are a small business or an already established organisation, business process outsourcing is practical. In a competitive market environment, outsourcing will help position your organisation with the needed strengths to expand customer base towards gaining significant profit.