Regardless of the industry, many companies have been, and continue, outsourcing more
and more of their operations. In addition to using outsourcing as a way to cut costs,
companies are also embracing it as a way to concentrate on their core competencies.
Outsourcing or managed services is defined as contracting with another company or
person to do a particular function.
The idea of outsourcing – to further enable business processes and build stronger
organizations – is a powerful one. While there is much focus on outsourcing for
transaction-intensive operations, companies can also generate greater economic value
from streamlining operations. This is especially true if the outsourced functions are high
in volume, or outside an organization’s core competency.
Best of Both Worlds
Companies that provide managed services retain senior level, broadly experienced
experts with the knowledge to solve process-centric problems quickly. The most common
forms of outsourcing are information technology outsourcing and business process
outsourcing.
You can find qualified service providers offering everything from marketing,
communications, and human resources (HR) to records and information management
(RIM). Marketing and communications firms, such as MMI Associates, a full service
public relations firm, serve as both a supplier and a buyer of managed services.
“I think that outsourcing provides a company with the best of both worlds. It allows you
to concentrate on your product or service and what you do best and utilize others to
provide their product or service as a resource for you. I outsource all of my IT for
instance, which is definitely not a strength of mine, which frees me up to devote all of my
company resources to what we do best… which is public relations,” shares Patty
Briguglio, President & CEO, MMI Associates, Inc.
The risks associated with data security and records compliance give organizations the
incentive to outsource functions like IT and records management. The expertise acquired
through outsourcing records and information management can protect your company
from potential fines and unnecessary e-discovery costs associated with inconsistent and
non-compliant administrative practices.
And, whether you choose a local, more personalized service or one of the avenues the
Internet has opened up for outsourcing, such as “nearshoring,” “noshoring,” and
“rightshoring,” information security is also a priority.
Legal and Regulatory Concerns
Legal and regulatory concerns affect not only records and information management
across the organization but also infrastructure functions such as human resources.
“Once you become an employer there are so many laws and practices of which you need
to be aware. So the question then becomes outsourcing vs. having an in-house expertise.
Outsourcing makes business sense – the areas in which you are not an expert will take
you longer and create more exposure. For HR, it is not a matter of if you will get caught
if you are not in compliance, it is a matter of when. We know when someone has true HR
knowledge and when they do not – it is our business,” explains Sheila Lowden, President
& CEO, Lowden & Associates, Inc.
Value of Quick Fix
One of the greatest advantages of the outsourcing relationship is derived from greater
access to professional problem-solving resources for short-term “get in and fix it”
situations – where the value of high-end expertise is needed as an immediate solution.
This short-term cost can even be spread over several contract years rather than taking a
hit in a single budget cycle. Understanding the level of expertise and the capabilities of a
service provider, beyond the day-to-day operations, should be an important part of the
vendor evaluation process.
“When outsourcing to an HR or other vendor, the key is making sure that the vendor is
going to deliver on your specific business needs. Often times, firms will provide you with
a cookie-cutter style approach. Make sure you do your research so you know exactly
what you are getting,” explains Sheila Lowden, President & CEO, Lowden & Associates,
Inc.
Conclusion
Outsourcing or managed services can enhance business functions in many ways,
including the ability to:
- Streamline operations
- Gain specific expertise without the overhead of additional staff
- Solve process-centric problems quickly
- Lower costs while concentrating on core competencies
- Reduce regulatory risks and potential fines
- Gain high-end expertise for immediate solutions
- Both parties – the client and the vendor – must remember that outsourcing is not just a contract, but a relationship to be nurtured and strengthened for greater advantages on both sides.
Contributed by: Tina Teree Baker, CEO, Cadence Group
Eli Richardson
May 5, 2021 at 9:51 amIt’s great that you talked about how outsourcing services come with cost-effective benefits. In my opinion, any small or big company could benefit from outsourcing some of their less-critical tasks. If I were to manage a business, I think it’d be a good idea to find outsourced suppliers to help me get quality products at low production costs. I appreciate your information on outsourced providers and their perks.