Blogs - Benefits of Outsourcing
| Charles Darwin would have voted for the adoption of business process outsourcing! |
| By Steve Reynolds on 3/30/2009 6:48:40 AM |
To survive in the current economic environment clients increasingly looking for rapid cost reduction; “transformation” can be deferred.
Charles Darwin once said “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”
The perceptible change in tone of client conversation makes you reflect on what Darwin said. Until several months ago, any outsourcing industry discussion was centered around “transformation”. However, since January of this year, the tone has changed dramatically. The conversations now are about “help me reduce my costs rapidly.”
Why January? Well no marks for guessing - business managers have finalized their budgets - or what’s left of it - and they have been asked to perform Albus Dumbledore magic – performing at higher levels with budgets stripped to the bone.
Outsourcing business processes is not a new competitive corporate strategy. Over the past decade, leading organizations are increasingly partnering with third party providers to reduce cost, increase efficiency and improve the quality of business processes ranging from the simplest of payables transactions to highly complex judgment-based work.
What many companies don’t realize is that, if implemented properly, business process outsourcing (BPO) can be a fast and simple tool to help a business survive a downturn and then to thrive when the economic storm calms down.
If the scope and service levels are right, businesses can achieve a significant decrease in cost structure in as rapidly as two to three quarters by working with third-party outsourcing providers, particularly those offshore. Regardless of how bad things become, businesses still need to deliver basic processes such as paying bills and processing accounts payable, and continue to serve the needs of customers. The provider community is very adept at quickly transferring processes to enable clients to take advantage of relatively swift cost savings, while maintaining or improving quality. And, depending on the state of the existing processes, the savings may approximate 30 to 60 percent on the current cost base.
Let me give you an example - When one of the world's largest online travel companies rapidly needed to reduce the cost of its customer care and finance and accounting operations, they turned to business process outsourcing, partnering with WNS. By leveraging the right onshore and offshore model, WNS delivered $3 million in savings right to the bottom line within the first quarter of going live. After ramping up the operations to over 1,000 people in fewer than nine months, WNS delivered cost savings of over 30 percent on the base run rate.
The economist John Kenneth Galbraith once said, “The only function of economic forecasting is to make astrology look respectable.” It is crystal clear that no one has a clue as to when the economy will revive, but by implementing BPO now, companies have access to a life raft to weather the storm and float into a safe harbor. Because BPO helps organizations adapt and thrive I am sure Darwin would have voted for companies to adopt business process outsourcing.
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