Main Reasons for Outsourcing in 2024

Source: Dynamix Solutions

At the initial stage of the development of technological outsourcing, the motivating motive for its use was to reduce its own costs, and it reached the point that many American companies opened offices in Ukraine. Details on how to outsource web development are written in the SpdLoad article.

Outsourcing critics currently say companies are cutting costs by replacing full-time full-time employees with less expensive contract workers. In the long run, such a strategy is unlikely to be viable.

Organizations that intend to use outsourcing should understand the extent to which an outsourced business project meets their specific needs.

Source: Deep Core Data

In companies where I had to work, outsourcing was considered not only a way to reduce costs, but also a way of giving greater flexibility to technology teams. Attracting for a while highly specialized expertise of outsourcing companies contributed to the implementation of innovations, while its own IT service could focus on key business problems.

Today, companies engaged in the field of IT service require strategic partnerships with customers and investment in their success, and not just in specific projects.

Nevertheless, as there are arguments in favor of outsourcing, there are as many reasons for abandoning it. In this regard, I give a summary of a recently published review.

The following are the main incentives for outsourcing.

1. Cost reduction

Source: Galați

CEMEX’s recently announced outsourcing deal with IBM shows a possible level of cost reduction.

Here is an excerpt from a press release: “It is anticipated that this agreement will allow CEMEX to save approximately $ 1 billion over the duration of the contract. In addition, it will enable the company to improve the quality of its services, improve the flexibility and scalability of the business, achieve maximum productivity and improve customer service. ”

An outsourcing transaction is comprehensive, as it involves the transfer to IBM of a number of functions related to finance, accounting, and personnel. The direct benefit for CEMEX from an outsourcing transaction is the ability for the company to concentrate on its core business and at the same time significantly reduce costs.

2. Extra flexibility

Source: Touch Support

If you talk with technical experts, they will say that now they are required to do more with less resources, which puts them on the brink of exhaustion. The staff is fully occupied with the day-to-day ongoing work to support the business and does not think about new projects that, as expected, they will deal with.

Back to the CEMEX and IBM deal.

“This agreement will allow CEMEX to take on a new challenge in the building materials market. IBM’s advanced infrastructure, business processes and technologies will help CEMEX achieve its goal of becoming more competitive. We see our strategic partnership with CEMEX as a good example of the transition to building a smarter planet, ”said IBM Senior Vice President of Sales Bruno Di Leo.

3. Access to specialized expertise

Source: InformaBTL

Scarce experience is, by definition, difficult to attract through outsourcing. This circumstance may deter some organizations from implementing initiatives that go beyond the scope of their own expertise. Outsourcing of part of the project or the entire project will allow them to introduce technologies that would otherwise remain inaccessible to them.

Excerpt from the press release: “IBM and CEMEX together will ensure the implementation of business processes, put them into practice and apply information systems developed by IBM. In addition, CEMEX will take advantage of IBM’s world-renowned expertise to accelerate the implementation of innovative practices in its business units to improve customer service, process quality and continuous cost structure improvement. ”

Source: Technology Visionaries

The IBM scale will enable both companies to provide services worldwide, with a network of over 70 service centers and over 400 data centers located in 170 countries with more than 40 languages.

As a retreat. I will continue to be amazed at organizations that are simply throwing work “over the fence.” Have we really not learned anything yet? You cannot just transfer work to a third-party company and assume that it will be done. Your responsibility is not limited to choosing a contractor. To succeed, you need to allocate your resources to the project and keep the entire process under control.

Here are 9 reasons why the head of the company should think about outsourcing.

1. You save money. Outsourcing certain functions of the company (accounting services, IT, PR and marketing, call center) will help reduce operating costs and increase profits. Thus, you translate fixed costs into variables and become more flexible, which means more competitive.

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2. The delegation of certain functions saves time and enables development. When it comes to small and medium-sized businesses, outsourcing helps to focus on key areas of activity and more rationally spend human and financial resources on the implementation of administrative and operational tasks.

3. Access to high-quality, “ground” for certain processes and functions, and at the same time relatively inexpensive personnel. In addition, it improves the quality of tasks.

Source: SmartData Collective

4. Working with a world-class provider provides access to external resources in other markets. Useful contacts are made, human capital and knowledge are attracted, as well as financial resources.

5. The transfer of tasks reduces the company’s dependence on individual employees. For outsourcing companies, their business is a business, not a profession. To remain competitive, they will monitor the quality of the services provided. Getting this approach to work from hired employees can be difficult.

6. Outsourcing of certain areas also reduces the burden on management. The fewer tasks are performed within the company, the less management needs to be controlled and the better it can concentrate on the development of the main lines of business. Thus, costs are reduced (cost of time management company, lost profits).

Source: Align Communications

7. Operational risks are also reduced. Having outsourced some of the functions, all that remains for you is to control the contractor in terms of fulfilling the terms of the contract.

8. Outsourcing helps companies stay compact. It is very useful if you do not want to maintain a large staff and create a complex corporate structure. Outsourcing can also be used to reorganize a business or optimize operating expenses.

9. Some companies use delegation of functions to improve access to foreign markets. The closer production is located to the market, the better. This type of outsourcing is called “offshoring.”

Source: Enterprise Computing Services

Companies choose outsourcing areas depending on their needs and financial capabilities. Someone gives him only two or three functions, someone is easier to maintain a staff of ten employees and at the same time outsource the maximum amount of work. However, they have one goal – to increase the flexibility of the company’s business model and reduce operating costs. Given the growing popularity of outsourcing, he copes with this task. Try it and you.