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Reasons for Outsourcing
by Offshoring Expert | 16 January 2020 | Outsourcing
Outsourcing has become quite common in the past few decades. Many companies tend to set up their own outsource units in the hope of taking their business to new heights of success. There are many reasons for outsourcing but the ultimate goal of any organisation is to be more profitable.
This goal can be achieved in different ways as outsourcing provides organisations with different opportunities to help optimise their company core processes to increase their profit.
Reasons Why Businesses Outsource some of their Core Processes
To Tap Global Markets
Tapping the global market is one way of increasing and expanding your global reach. However, it’s important to have established your brand in your market before trading internationally.
Strangely, there are many valuable products and services only available in certain countries which makes it hard for consumers to purchase and enjoy them. If your business is looking into untapped markets on nearby countries, it’s time to take action and outsource. Aside from expanding your business internationally, it also gives you the opportunity to expand your offers to foreign markets.
Tapping untapped global markets is one of the big reasons why organisations and businesses outsource. It’s expanding your market reach more organically, creating buzz offline and online.
To Have a Diverse Workforce
Businesses that tapped foreign talents tend to be more successful in their venture. When you outsource services of local talents, you tend to learn more of your foreign market. Say your business is in Australia and you’re targeting New Zealand and the USA market, you might want to hire a few more employees to in their local areas to learn more about the trends in their area.
Hiring local talents can give your perspective that the internet cannot provide. IT improves marketing campaigns, plans, and strategies that directly affect your organisational goals. Hiring professionals from foreign countries gives businesses an advantage as they know their own culture better than anyone else. Remember, creating a group of diverse professionals increases your success rate better than having only local talents.
To Take Advantage of the Business Laws in the Country
Every country has an ‘Ease Of Doing Business’ index. This index shows how favourable it is to invest or start a business in a certain country. It also takes into account the taxation and other business-related laws in the country. If your base country ranks low on the ease of doing business index, then outsourcing your business will yield great results for you. In some cases, your outsourcing business unit might be more productive than the unit in your base country. This is because of the more favourable laws in a foreign country.
To Reduce Both Product and Service Cost
This point is somewhat related to the last point. The taxation laws and ease of doing business might also help you reduce the cost of your business. You can produce products for a lesser cost as compared to your base country. China is known for low production cost because of the bulk production of materials and products.
The labour can also be less expensive compared to hiring local employees thus, businesses can produce more products at a relatively lesser cost. The same can be said for the services sector. They can cater to the same number of enquirers, even more, for a lesser business cost.
To Provide Better Services to Citizens of the Destination Country
The reason for outsourcing is mostly to make the business more profitable, however, in some cases, you might be invited to invest in another country. There are still many countries where companies like PayPal, Starbucks, or Wal-Mart haven’t been operating yet. Note that these corporations get invited do conduct business or at least invest in foreign countries.
Many cases occurred wherein representatives of these countries invite such corporations to provide their home country with the luxury or facilities these organisations offer. In return, such establishments grow significantly more and have more opportunity to expand multi-nationally.
There are way more reasons for establishments to outsource. However, the aforementioned reasons are the most prominent rationale accepted between businesses. Companies look for ways to decrease their costs while maintaining the integrity and quality of their products and services. The main goal of outsourcing is to boost company gains and create a more efficient and effective business process.
