Don't Think Outsourcing, Think Efficiency
    Category: Column By : James Kallman & Tan Mei Nie Read : 1265 Date : Tuesday, August 11, 2015 - 22:02:31

    If you’ve got a leaking faucet you’d call a plumber, right? Getting a professional to do the job saves time and aggravation in ensuring that there is no wastage and water flows on demand with reliable regularity. Nor is this restricted to blue collar trades, for as anyone who has wrestled with the magnitude of paperwork required to file a U.S. tax return will attest, it’s far more efficient if you outsource the job.

    Although the process of “outsourcing” has been around a long time, its derivation from “outside resourcing” dates back less than half a century. In many ways the term is an offshoot of globalization where multinationals discovered that it made sense to hive off whole sections of their operations to outsiders.

    In recent times though, outsourcing has developed a bad name. This reputation came partly for it being accompanied by offshoring, with its cultural, language and time zone differences. It has also been associated with job losses when whole departments have been outsourced and personnel let go.

    Yet although there have been cases of poor judgment in implementation, the need for companies to outsource at least some basic operations continues to increase. The onset of the technology era leads to far more complex operations requiring new skills and new departments. In many companies, too much time and money is now expended on managing operations rather than improving the core business.      

    Economies of scale, for instance, dictate that it makes no sense for many companies to carry out their back office functions when these can be more efficiently outsourced to firms for whom these are a core competency. Nor does it stop there, for any function that demands the use of personnel with specific skills but only on an intermittent basis is probably best served by outsourcing. This spreads far beyond the realm of financial services to the likes of IT, legal, logistics, customer service, and even manufacturing itself.

    There are trade-offs to be made, of course, such as the risk of exposing confidential company information to a third party, or a lack of focus on a specific company’s needs. However, in today’s market an outsourcing company that did not respect confidentiality or their client’s needs could not long survive. As in any other business relationship it’s a matter of trust.

    Yet the benefits far outweigh any slight irritations that might arise sometimes. Management can sleep peacefully knowing that dedicated specialists employing the most updated procedures and equipment available are handling outsourced operations. Moreover, time and money is saved by not having to search for specialized personnel to hire. Yet it’s not just a matter of saving cost, but also gaining peace of mind. So don’t think outsourcing, think efficiency.