A lot of businesses today are going digital. Online shops have replaced brick-and-mortar stores. Most corporate teams are collaborating through video calling. As such, the success of a business lies in innovative and smart processes. A very popular technique among companies today is business process outsourcing, or simply “outsourcing” in layman’s terms. It means hiring an outside team to perform operational duties for a certain company.
In mainland Australia, there are around 31,417 outsourcing companies. This is a result of Australian businesses being more reliant on the labor force than capital. Most of these ventures have to do about information management, real estate, and telecommunications. If you’re an entrepreneur looking to outsource your business, you first need to be aware of the nature of an outsourcing company. Below, let’s discuss 5 things you should know before outsourcing parts of your business.
What is Business Process Outsourcing?
Business process outsourcing (BPO) means contracting an external service provider to do specific work processes. These commonly include:
- Content Writing
- Customer Support
- Data Entry
- Social Media Management
- Technical Support
From start-ups to Fortune 500 companies, outsourcing companies supplement basic business operations in Australia.
Two Types of Outsourcing Services
There are two main types of outsourcing services: front-office services and back-office services. Front-office services commonly cover customer support, marketing, and technical support. While back-office services commonly cover accounting, content writing, data entry, payrolling, social media management, and telemarketing.
Three Types of Outsourcing Companies
There are three types of outsourcing companies in Australia: nearshore, offshore, and onshore. A nearshore outsourcing company is an external service provider located in the countries bordering Australia. A good example is Fiji Islands or Indonesia, where some Australian businesses outsource software development. An offshore outsourcing company is an external service provider located in other continents. The best example is Australia outsourcing different business services to the Philippines. An onshore outsourcing company is an external service provider located in the same country where a business is a base. A great example of this type is Sydney businesses outsourcing payroll services in nearby NSW suburbs.
Advantages of Outsourcing
Among the most popular reasons why Australian businesses engage in outsourcing are:
An outsourcing company can increase your focus on the core areas of a business. By turning over the basic and repetitive operational tasks to an outsourcing company, you free up your internal team from the time they consume doing these tasks. Such free time can be diverted to the core functions of the business. These include financial planning, marketing campaigns, product development, and strategic planning.
Hiring an outsourcing company that specializes in certain business processes can also increase efficiency. Because they are result-oriented, they can accomplish quality work in double the time your regular staff can do it. It’s because they have the right skills and tools to speed up productivity.
The best benefit of an outsourcing company is cost-efficiency. If there are works that you may only need to accomplish per season, you can hire an outsourcing company during that period only. You also save hiring and training regular employees, which is much more costly than hiring an outsourcing company.
Disadvantages of Outsourcing
Like other ventures, outsourcing may also result in some disadvantages. These may include:
When you hire an outsourcing company, there’s a need to give them direct access and control to some business functions. This is somewhat risky and can compromise the safety and security of your business data.
There is somewhat a communication barrier if you hire an outsourcing company offshore. For example, there are 3 to 4 hours of the time difference between Australia and the Philippines. So, there’s a need to adjust the time in case the company and the external service provider need to meet for some discussion. The difference between the culture and languages of both countries can also be a barrier to deliver quality service.
Last, most outsourcing companies are not stable enough to last in the market. So, there may be a time when you are depending on their services and they suddenly closed. You’ll be left hanging and will need to find a new external service provider.