Can Outsourcing Benefit Micros and SMEs?
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Outsourcing has revolutionised business. Micros and SMEs have generally lost out on the advantages of outsourcing. But what is it and how can it help micros and SMEs?
What exactly is outsourcing?
An activity, function, or process is outsourced to a third-party service provider. Outsourcing has three main market segments: business process outsourcing (BPO), IT outsourcing (ITO), and knowledge process outsourcing (KPO).
XMG Worldwide estimated the global outsourcing industry at 270 billion dollars in 2010, up 13.9 percent from 237 billion dollars in 2009. In 2008, the market was approximately 212 billion.
Why do firms outsource?
According to business theory and practise, companies thrive when they concentrate on activities that provide them a competitive edge over rivals, leaving non-core tasks to other enterprises.
So British Airways concentrates on operating its aviation network, leaving luggage handling to an outsourced partner.
According to an Outsourcing Institute study of members, the top 5 reasons for outsourcing are:
- Controlling operational costs
- Refocus the firm
- Obtain world-class capabilities
- Internal resources freed up
- Gain access to internal resources
So a company might save expenses by outsourcing its own IT assistance. This might bring in technical expertise while lowering total payroll and benefits expenditures due to staff transfers.
Outsourcing payroll and benefits processing allows for newer, more cost-effective payroll and benefits processing technologies to be introduced.
Can micros and SMEs outsource?
The major outsourcers need multi-year, multi-million, or even multi-billion dollar contracts, therefore micro, small and medium-sized businesses (MSMEs) have historically under-utilised outsourcing.
Outsourcing to highly trained freelancers or independent enterprises (service providers) located locally, nationally, or globally helps these organisations to realise process efficiencies and cost savings.
Among the primary advantages of micro- and SME outsourcing are:
1. Improves efficiency
The use of skilled service providers with specific skills, expertise, best practises, and cutting-edge technology and equipment helps organisations to obtain process efficiencies and greater effectiveness.
2. Saves money
Micro outsourcing improves cash flow by lowering overhead and capital expenses. Micro outsourcing, for example, may save a company money on both wage and pension expenditures. Lower workforce means reduced office space, heating, and equipment expenditures.
Cost reductions of 50-70 percent are possible, according to estimates.
3. Ensures the use of reasonably priced resources
By bidding on your projects, micro outsourcing ensures that pricing genuinely represent the service supplied.
It's like eBay, except with prices falling instead of rising! Firms may thereby employ competitively priced resources obtained locally, nationally, or worldwide, while also considering the service provider's competence and experience.
4. Provides "on-demand" skilled resource access
Many organisations cannot afford to hire particular expertise permanently or just require them sometimes.
The recession and the delayed recovery have aggravated this. Micro-sourcing enables firms to "plug in" specialised talents and experience as required.
5. Focus on core operations
Firms succeed best when they concentrate on their main business operations, giving them an edge over rivals.
Micro outsourcing non-core functions frees up management, personnel, and capital to focus on value-added activities, as in the British Airways example.
6. Allows outsourcing of short-term or low-cost employment
Outsourcing has many advantages, but they only materialise when firms contract for years and millions of dollars. Jobs that can be completed in a few months or days may be outsourced. Jobs worth thousands or hundreds of pounds may also be outsourced.
How to begin?
Many websites allow you to post job advertising. Included are jobseekers (jobcentreplus), s1jobs.com, CV-Library and monster. Jobs may be tweeted or posted on Facebook.
However, these platforms do not cater to micro-outsourcing or freelancers. Their goal is to give you with a big pool of CVs to pick from.
Fortunately, there are sites that specialise in micro-outsourcing. On these platforms, you may specify your needs, obtain real-time offers from freelancers, and set milestones with your favourite service provider.
You can also invite freelancers to bid on your work or post jobs confidentially so that only those invited may bid. Instead of listing unnecessary employment experience and abilities, freelancers advertise their services on these platforms.
Summary
Outsourcing can help organisations save expenses and improve procedures. However, it has only benefited wealthy corporations who could afford to outsource. Micro outsourcing helps micros and SMEs to profit from outsourcing without incurring fees.