Written by Allie Delos Santos
Companies must always find a scalable way to grow the business, increase brand visibility, and rise against competitors.
Outsourcing is an excellent way for companies to lower expenses, improve flexibility, and access expertise otherwise not available in-house. More importantly, it is an effective strategy to expand the business into emerging markets. Consider working with a BPO Company in Phoenix to reap the benefits.
This article discusses how you can outsource non-core functions and focus on core areas with outsourcing.
How Outsourcing Non-core Functions Empowers Business Growth
So what is business process outsourcing (BPO)? It is the process of subcontracting non-core business functions to a third party.
Instead of learning and keeping non-core functions such as staffing, payroll management, accounting, customer care, and inventory management in-house, companies can outsource them. This practice allows companies to focus on revenue-generating activities and gain better results.
Below are ways to enhance business growth by focusing on core areas through outsourcing.
Improving In-house Efficiency
You enjoy greater efficiency when you outsource administrative processes. Outsourcing providers invest in the newest technologies, highly skilled professionals, and a larger labor force. These factors allow them to work more efficiently, so your staff can focus on higher-value activities and growth strategies.
When you outsource work to a third party, you gain access to professionals with in-depth knowledge of the work area. The BPO firm does what it knows best and shares its experience and expertise with your business.
Accordingly, your in-house team experiences better utilization. The main goal is to prevent the over-allocation of tasks to your internal staff and the underutilization of resources, which can compromise your team’s effectiveness.
Outsourcing contracts are not only aimed at efficiency but also cost savings. Outsourcing certain non-core functions helps save 70% in labor costs, improving the company’s bottom line. Client companies can then allocate the freed-up resources to business-growing ventures.
The good thing is that outsourcing back-end functions does not reduce the quality of the client company’s products and services. It does the opposite. The improved efficiency and the ability to focus on core areas with outsourcing help maximize the client’s overall productivity.
Hiring Fewer Employees
With outsourcing, you do not need to hire more employees to perform non-core functions. Partnering with a third-party provider means avoiding the tedious and expensive recruitment process for back-end roles, which could lead to disappointment.
In any case, in-house teams are costly. The average salary in the U.S. for a customer service representative is $47,279 a year, excluding annual leave, sick leave, paid time off, overtime, insurance, superannuation, and other benefits. Multiply that with the number of agents you need on your team, and you end up with a hefty total labor cost.
Minimizing Human Resource (HR) Work
One of the biggest tasks a business handles is HR work, which involves managing the well-being of employees through the following tasks:
- Negotiating enterprise agreements and employee contracts
- Drafting workplace policies
- Resolving employee disputes
- Addressing complaints from staff (including discrimination and bullying)
- Keeping track of employee files
- Approving leave requests
- Understanding awards that apply to the company
HR is a crucial department, but it is incredibly time-consuming and far from a core competency. When you outsource non-core operations to an external provider, you can reduce internal staff and significantly cut back on HR work.
If a company decides to subcontract its non-core functions, business operations become leaner. This means fewer people to manage, fewer issues to resolve, less office space needed, and fewer real estate costs.
Lean operations also mean that information technology (IT) infrastructures and systems can be scaled down, further simplifying business operations, reducing costs, and eliminating the need for stakeholders to invest much time in back-end processes. Overhead costs are reduced, if not eliminated when outsourcing non-core processes to BPO firms.
Increasing Competitive Edge
Strategic outsourcing contributes to your gaining a competitive advantage against rival companies. When you use a hybrid resource model that combines talent from in-house and third-party teams, you enable the delivery of quality services and products.
The unmatched combination of efficient business processes with expertise and optimal use of in-house resources is a winning method for improving productivity. As you focus on core areas by outsourcing your non-core processes, you realize a stronger competitive edge.
What Non-core Functions Can You Outsource to Empower Business Growth?
Non-core functions such as HR, data entry, logistics, and bookkeeping are ideal for back-office outsourcing. Outsourcing also applies to front-office tasks such as customer service and tech support. Non-core processes are often more administrative, supportive, and operational, allowing third-party firms to perform them easily.
Businesses that want to focus on core areas, reduce costs, and improve efficiency can do so with outsourcing. Here is a closer look at non-core functions you can outsource to foster business growth:
Accounting and Payroll
Accounting and payroll are tedious; strict regulations vary per location and require accurate processing. As you invest in business growth, you can allocate more time to accounting or outsource it to a third party.
Payroll tasks you can outsource include:
- Processing payroll payments
- Recording employee wages, bonuses, and applicable taxes
- Calculating health insurance and other benefits
Here are examples of accounting tasks you can delegate:
- Preparing management accounts (income statements, balance sheets, cash flows, profit, and loss)
- Processing invoices and recording transactions
- Maintaining general ledgers
- Setting up accounts
- Transforming management accounts into an international currency
Tax reporting differs in each state or country. Learning the local tax regulations that apply to your business and hiring qualified in-house accountants is costly. Outsourcing tax reporting to a firm with local manpower and knowledge makes more sense for ensuring your taxes are properly reported.
It is common worldwide to outsource full customer service, a live chat team, or at least one virtual assistant to manage customer inquiries. Customer support does not need to be done in-house. A BPO firm can manage it on your behalf using a contact center as a service (CCaaS) solution, fully integrating mobile, landline, and online communications 24/7.
The main benefit of outsourcing this function is that it eliminates the need to keep an agent on duty during standard business hours. Third-party agents can work only the hours you require per week.
Staff augmentation is a lean and fast way to enter new target markets. With this, you have a full-time team in a foreign location without establishing a legal entity or undergoing extensive recruitment processes. The external team knows the market well and can perform all tasks required.
Although this solution is more common in the IT sector, companies can use staff augmentation to test areas of the business when expanding and targeting new markets.
You can use distributor search when exporting goods to a new market while working with local distributors. With this, you do not need to set up local operations.
Below are reasons outsourcing this function is a good idea for growing the business:
- Low cost of entry
- Lean business model
- Easy access to developed supply chains and market knowledge
- Adaptable to changing market conditions
- Proper handling of warehousing and transportation
Market research is essential. Without it, you only have subjective opinions when entering a new market. Investing in market research services is more affordable in the long run because it prevents costly errors and identifies new market opportunities faster. A BPO company evaluates market size and trends, competition, and laws and regulations when doing the job.
Web and Software Development
Nowadays, a company needs a well-functioning and well-designed website that customers can visit to start their purchasing journey. A functional website increases credibility and helps reach more audiences. Creating a website in-house requires investment in acquiring equipment, hiring developers, and managing ongoing projects, so outsourcing is more viable.
Importance of Allocating Resources to Core Areas
Many business processes need local expertise, but acquiring internal teams is time-consuming and expensive. Instead, you can focus on core areas with outsourcing and leave the rest in the hands of a reputable BPO firm. Without wasting time and energy, the talent you need is always at your side so that you can concentrate on your core business areas.
When you allocate more resources to core competencies, you can generate more sales and attract new customers. When you take the pressure off your internal teams, you divert their attention to higher-value work such as research and development and quality service delivery. All of this has a positive impact on your business’s overall performance.
Your business has limited funds, personnel, resources, and time. Focusing on growing your brand and customer base instead of internally managing administrative work is best. Outsourcing non-core functions unlocks your business’s potential and takes it to greater heights.
The Bottom Line
You cannot ignore your core business and expect your company to succeed, grow, and scale sustainably. Similarly, you cannot strengthen your core functions overnight. You need the support of a reliable BPO company to take administrative tasks off your plate so you can focus on business expansion, product and service development, and customer generation.
If this resonates with you and you need support for your non-core processes, let’s connect!