Outsourcing – moving from a dirty word to the business norm

Outsourcing moving from a dirty word to the business norm

It wasn't so long ago that outsourcing was considered a dirty word; now, it's a business norm.

Just a decade ago, organisations used to think very carefully before moving from a core workforce to external expertise, both on-shore and offshore.

It's not completely straightforward, of course. Outsourcing still causes controversy the difference today is that every large company (and increasingly, smaller companies) will draw on some form of outside help, rather than the select few.

The result is that leading executives use external provision to deal with a range of IT and business processes. Consequently, there continues to be a significant interest in outsourcing and there was an increase in global IT outsourcing in the first quarter of 2010.

Research from analyst Everest Group suggests a quarter-on-quarter increase of almost 6% on outsourcing spending. So with outsourcing now a business norm, which back-office functions should you look to externalise?

The broader economic context is one issue that must be considered from the outset. A combination of domestic and regional strife means UK organisations in both the public and private sectors need to cut costs and manage efficiencies. Outsourcing some back-office functions can help you achieve these cost and process efficiencies.

But do not get hung up on cost reduction. Only use outsourcing if the method fits with your broader business strategy and the provider will be able to boost the quality of your activities. If external provision also cuts your cost base, then great that's another benefit to take back to the FD.

Your decision should also be influenced by your propensity for risk: do you have the internal resources to effectively manage all your key processes and systems in-house? On the flip side, are you prepared to outsource an IT or business process to a third party organisation?

If you are, then you will need experienced suppliers with an excellent knowledge and understanding of the particular area/s that you intend to outsource, be it payroll or financial management.

Whatever the area, there is no longer any need to be scared of outsourcing. Just make sure you do your homework and work with a trusted partner that can help you deliver quality services.

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