Profit margins are the main indicators of business profitability. The size or growth of a business ultimately doesn’t matter if it isn’t making any profit. In fact, boosting profitability has always been a critical objective for executives.
There are two ways you increase profit margins and ultimately, business profitability; either you increase your prices or reduce your costs and expenses. Between the two options, cost reduction seems to be the preferred method as outsourcing services has become a viable strategy for businesses these days.
According to a study, outsourcing is a wise strategy if companies aim to save on labor costs, exploit production differentials both within the services sector and between services and manufacturing, or take advantage of globalization.
An article in the Financial Times even went as far as saying outsourcing non-core business activities is a central element of the new economy.
How do you boost business profitability through outsourcing? Here are some tips:
1. Take advantage of technology. Outsource and collaborate with remote staff, delegate back office tasks, and streamline your processes with a team of experts.
Technology gives you a great advantage of going global without making huge investments. You can easily hire remote staff across the globe at a less expensive rate without sacrificing quality of service. Working with staff remotely is also easier with technology.
Outsourcing daily, non-core but essential business tasks are often the best tasks to delegate to another team. Payroll, data entry and accounting services are great examples. When you outsource to the right people, you have people who will do these tasks as well as you, if not better.
This will help take a load off your shoulders so you can focus on your business tasks.
2. Extend your company by hiring a team of professionals.
The biggest advantage outsourcing can give your business is not only reduction on costs and expenses but a bigger database for talent and manpower. You can outsource your information technology and security needs, for example, to a highly qualified team of experts without having to keep them on retainer. This way, this aspect of your business is not only taken cared of but is given an advantage to stay on top of the game.
3. Use outsourcing to strategize business growth.
Business growth – scaling up and extending – needs two things: the right pace and of course, money. Growing too quickly is sometimes necessary to catch up with business demands but without the proper infrastructure your company will collapse.
Strategic outsourcing will help you scale up and minimize risks or liabilities. You can test the waters first by outsourcing one aspect of your business at a time – whether it be customer service, A/P services, IT and security or marketing and research. This can help you achieve the growth you aim without having to sacrifice a lot of investments on infrastructure (equipment) and time on training and hiring experts.
4. Know the strengths and weaknesses of your business before deciding which business processes to outsource.
Before you outsource, you need to know your company inside out. This will allow you to identify which areas you need help in. Find an outsourcing provider that can complement your company’s strengths and strengthen or boost your company’s weaknesses.
Outsourcing should complement your business and fill the gaps.
5. Find the right outsourcing partner.
Outsourcing may be a great business strategy but it won’t work if you don’t find the right partner to outsource services with. Make sure that the provider you’re partnering with is the perfect fit for your business needs and your company. They should be able to meet the standards you require, deliver and meet beyond expectations.
Outsourcing is a key element in today’s global economy
Over the years, we at Infinit-O have seen the growth of outsourcing as more and more companies from various industries depend on outsourcing services for their operational functions.
Outsourcing has been a key enabler of high performance and optimized operations for companies. While tough competition in businesses has brought cost pressures and heightened focus on bottom lines, outsourcing services have become synonymous to faster turnaround rates, increased quality of work and more cohesive business management.
We are a business process outsourcing (BPO) company located in the Philippines that provides a wide and valuable variety of outsourcing services including Back Office, Data and Research, Finance and Accounting, Contact Center, Sales and Marketing, and Healthcare Outsourcing Services. Contact us for more detailed information on services we offer.