Why do companies outsource?
The world has changed its way of working. The businesses are on a cutthroat landscape which requires you to be on your toes. So, finding the right way to do business is an important part of making your operation work well.
One of the best ways to provide a solution is to outsource the work to another company or offshore location. We can say that Outsourcing can be a long practice for most companies. Also, when it comes to business, we recommend finding the right outsourcing company that could help you to gain a competitive edge in the new global market.
Thanks to outsourcing, it can capability to meet the needs of the tech industry and is revolutionizing the way businesses can work on. As per Deloitte, it is reported that 31% of the IT services were outsourced and Statista confirms that the outsourcing industries generate 88.9 billion US dollars in revenue.
Here, in this blog we will answer the following questions related to outsourcing:
- Why do companies outsource?
- What do they outsource?
- Which Industries are doing most of the Outsourcing?
- What role does automation have in outsourcing?
- What are the trends to watch in 2020?
Talking about 2019, the Statista shows that the global outsourcing market can generate 92.5 billion US dollars.
Why do companies outsource?
There are various reasons for business leaders to opt outsource as outsourcing offers a solid strategy to maximize efficiency, save cost and improve core services. Look at a few of them.
- Low operational and labor cost is the primary reason to choose outsource
- Companies choose to outsource or offshore so they can work on core business processes while delegating everyday time consumed.
- Offshoring and Outsourcing enable companies to leverage the global knowledge base and access to world-class capabilities.
- Your internal resources will be free to carry out other effective tasks and can get primary benefits when companies outsource.
- There are times when stranded internal resource crunches then they can gain access to resources that aren't available internally.
- Many times, outsourcing is undertaken to save costs and provide buffer capital in a manner to earn profit for the company.
- Delegate responsibilities to manage external agencies/companies and control the functions with realizing their benefits.
- Outsourcing is a kind of offshoring that helps companies to mitigate risk and gives primary reason embarked on it.
- Enable the outsourcing companies and realize the benefits of upgrading the project as per client's requirements.
- Few companies outsource to expand and gain access to a new market and taking the service delivery closer to end-users.
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What are the prime benefits to outsource mobile app development?
- Better Quality and Expertise
- Less Time and Greater Efficiency
- Easy on the Pocket
- Agile to Perfection
Get a brief guide for Mobile App Development and how outsourcing is smarter for Mobile Development.
What do companies can outsource?
We can refer to outsource as a technique in which businesses entrust the process of the company and perform off-shore functions to external vendors. There are lots of different kinds of businesses that can be outsourced. Let’s start on by taking a look at some of the valid and compelling experiences one can get from outsourcing.
Which Industries are doing most of the Outsourcing?
Talking about today’s time then almost all industries are into outsourcing such as recruitment, IT, marketing and more. If you’re looking to scale your business rapidly then without lowering your services, hire dedicated offshore developers to manage your company with ease. Any business needs to innovate their brand and manage everything effectively.
Evaluate organizations within specific industries that seek to assign equal significance for both shared services and outsourcing. There are more than 250 different industries that have an annual income of $1 Billion with making planned investments in either or both outsourcing.
The impact of outsourcing can potentially have a business performance which becomes more attractive for that business that tackles fundamental challenges and opportunities with giving the best business environment. There are buyers who are getting savvier of focusing their outsourcing plans to improve competitive advantage.
Get ready to bring your organization a competitive edge as the source decisions are no longer about cost as it represents a change in the way business leaders view outsource as an integral function of operation.
Talking about the leading banks then they do not lead the market as their process applications aren’t better than their competitors. Whereas in the insurance industry the company embarks long-term engagement which claims the process managed and adjudicated with the third party. Also, the customer only cares about how much a policy costs instead of focusing on claims they’ll receive.
Additionally, the retailer will need to maintain the entire application in-house portfolio when it comes to devoting internal talent and IT resources with improving customer’s online shopping experience. This is the time when buyers can figure out how one can improve their organization by using resources and knowledge available through using third-party relationships.
How industries are experiencing dramatic shifts and developing long-term outsourcing strategies?
There are the top 5 most bullish industries that have increased outsourcing based on planning and achievement. Read more to know more:
- Hi-Tech and Software: Rapid growth has seen in software models which impact cloud computing on licensing and pricing dynamics. Drive out the cost of the development and provide outsource services itself.
- Entertainment and Media: High development is seen in the Entertainment industry, various media and publishing companies with an impact on radical distribution and business models.
- Banks: The bank is most profitable as it de-leverage, re-regulation and offers unprecedented credit pressures.
- Insurance: New compliance measures that cause unprecedented administrative costs with a shortage of risk analysts with taking it on a higher level.
- Energy and Chemicals: There is a high price volatility of oil products which comes along with exploration projects, shortage of talent, aging infrastructure and other constantly changing compliance requirements.
Industries that have experienced secular changes and now are investing in the shared service framework
There are industries such as Manufacturing and Retail that have already been through secular shifts over the decades. Outsourcing has been the best option that has explored over the years and finds more pennies to save. Dig out the new challenges and productivity via outsourcing and prove fatal in low margin business. Get to know a few of the shared service framework mentioned below:
- Telecom and Wireless: We find a lot of active outsourcing engagement with both new and existing wireless and telecom industries. Evaluate BPO initiative in areas where sourcing and transactional accounting still prefer to engage with several smaller multi-vendor engagements.
- Utilities: Be more conservative with outsourcing and gives strong shared service with adopting hybrid & shared services models. Get secure change according to your needs and get more dramatically shift.
Public Sector is facing an unprecedented challenge
In today’s time, the Public sector is undergoing a secular change that can be quite simple where local government bodies are under unprecedented pressure to drive long-term plans. There are 55% of the private sector bodies that come with foresee moderate increase in the outsourcing activity. The outsourcing elements give operational support with varying degrees.
What role does automation have in outsourcing?
There is no doubt that the job market is changing faster than ever but the growth of automation and artificial intelligence raises the question about the need for human employment. The automated function will reduce human interference and will soon end outsourcing? Is this true that automation is next outsourcing?
Well reducing human interference doesn’t mean ending up employment. But it will free up in-house staff and focus more on the productive function which helps in business development. There will be automated robots who will perform all repetitive tasks and will not need human interference. This technology embarks the new technology to use for customer satisfaction. There are outsourcing companies that are using RPA technology to boost delivery to customers.
Ways how Outsourcing and RPA are parallel to each other
- The repetitive task with RPA: The outsourcing companies very well know that RPA can handle repetitive tasks without any errors thus the use becomes necessary.
- Use RPA as Administrative Assistants: Businesses generally hire an outsourced agent if they want administrative assistance. So with the RPA technology business process for outsourcing become easy and can increase business productivity with ease.
- Meeting compliance standard: We have heard that RPA will end outsourcing but it’s not true as both work side-by-side and can help to perform the monotonous task easily. One can establish a rapport between both outsourcing and collaborating firms.
- Outsourcing companies leveraging RPA to get scaled services: RPA helps in highlighting the customer requirement with therefore function as a tool for scalability. There was a time when automated services help to operate with multiple bots and deliver services accurately on-time to the customer. Now with RPA, it can deliver great results to business customers.
- Reduced cost for an outsourcing company: Reduce the necessary equipment with RPA to limit outsourcing expenditure as it decreases fees for businesses and will change by time. Automation is an affordable technology that can be used for all businesses with ease. Know the handy checklist for adopting Automation Testing as the world is going paper to wireless devices using Digital transformation.
What are the trends to watch in 2020?
According to Indian surveys and data, the IT expenditure in 2019 will increase by 3.2% compared to 2018 estimate. Check below what we can expect in 2020.
- Switching Boundaries as India and China can torchbearers in IT outsourcing arena
- Innovative technologies will boost up
- Customer-Centric Approach with effective customer engagement
- Specialization has become the new buzzword for newer services
- Moving towards an experience economy
- Collaboration over Competition
- Distinctiveness through RPA and AI
Looking more to learn about technologies and how to get leads, here’s the ultimate guide to Mobile App Development only developed for you.
If you’re looking for an alternative then outsourcing is the best choice to optimize development and productivity. Connect with us to get the best custom and optimize development at an affordable cost as we offer excellent automation, centralized and accelerated workflow. Talk to us to outsource or look to improve your business for higher productivity.