Did you know that Kodak was the first business to outsource its IT services? That was way back in 1989 when Katherine Hudson, Kodak’s CIO then, considered IT as a non-core function. As part of Kodak’s reorganization, she outsourced the company’s mainframe and network data to IBM.
This move was termed the Kodak effect. The Kodak effect became strong in the 1990s where most computer companies outsource their payroll services. Since then, we cannot imagine the business world without outsourcing services.
Outsourcing services is short for outside resourcing. This means a company hires an outside resource to perform basic operations and services. These include operational and non-core functions like accounting, data management, call center, payrolling, and sales.
Outsourcing services become a popular business practice because it offers a lot of benefits. Below are some of the most common benefits of outsourcing services.
Businesses can save the expenses of hiring and training employees when they outsourced non-core functions. In most cases, businesses from developed countries do outsourcing services from developing countries where labor cost is much cheaper. They can also save from overhead costs as the outsourcing services work in remote locations without the need to rent physical spaces and equipment.
Outsourcing services open up a large pool of skilled manpower that can help businesses scale up. They can hire this manpower to handle a dedicated project for specific goals. Once a project is complete, they can ramp up to another project by getting another set of skills. There’s no need to worry about labor rules and termination fees.
Outsourcing services allow companies to choose a 3rd party service provider based on their skills. They can assign an outsides team that specializes in the work process that the companies will outsource. This results in to increase in productivity. People who have enough knowledge of the work process can complete the tasks better and faster.
Outsourcing services enable companies to expand globally. Through such a method, companies can have satellite offices in different countries that can be handled by 3rd party service providers within the location. It makes it easier to expand its reach around the world.
Outsourcing services open up a competitive environment for different skilled workers around the world. It builds up a portfolio of skilled manpower that you can hire to scale your business. Most of the time, a collaboration from different cultures and knowledge results in a more competitive business.
Outsourcing services free up a business from many hours of work. Businesses commonly outsource repetitive tasks to save time from these activities. As such, their team can spend the time saved on more important tasks. Outsourcing services based on the skills needed can speed up the work and results in better quality.
If a business wants to scale globally, it can resort to outsourcing services for time-zone advantages. Hiring a 3rd party service provider in the country where the business is expanding its market allows operating hours within its time zone. It no longer needs to hire 24/7 employees to keep up with the market time.