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Beyond costs: 5 trends in outsourcing

May 12, 2015 Article 2 min read
Lou Longo

From customer service and information technology to back office financial reporting, transaction processing, and human resources administration, service companies often outsource noncore business processes. Historically, this was done internationally, and it was done specifically to reduce costs.

That’s changing. Although much outsourcing is still done internationally, some companies are outsourcing closer to home. More importantly, however, they’re outsourcing for different reasons. Sure, costs are still a motivation, but today’s service companies are looking beyond costs to efficiency, sustainability, and security. Here are a few of the current trends.

It’s all about strategy and efficiency

Today’s CFOs are looking at outsourcing from more of a strategic standpoint than ever before. They’re identifying how third parties can provide transparency regarding the value provided versus the number of transactions handled. How quickly are transactions addressed? How satisfied are customers? How does that affect profitability? The goal is to gain efficiencies of scale and, in doing so, create best practices.

Social media is a significant focus area

Many leading service organizations are outsourcing their social media and engaging third parties to participate in live chats to enhance customer service. As people become used to this type of 24/7 live access, we expect to see more growth in this area. Some companies are including incentives in outsourced providers’ contracts for new ideas and improvements in areas such as customer satisfaction. This is why we’ve seen an increase in online surveys that attempt to measure our satisfaction; many times, positive results are driving incentive payments to outsourcing providers.

Security is a driver

Security is one of the biggest challenges for companies. It makes sense, then, that many opt to piggyback on the security systems in place at third parties and take advantage of any indemnifications that may be offered. When it comes to technology, one hot button area is data analytics. Who owns your data: you or your third-party provider? Oftentimes, if you want to maintain ownership of your data, you pay a much higher service fee.

It’s not just for large organizations

Outsourcing has typically been the domain of very large organizations. Recently, however, more middle-market businesses and start-ups have been able to take advantage of it because of a new, outsourcing-as-a-service model. Companies can now pay by transaction versus via monthly or annual fees, which allows companies to scale up and pay as they go. As recognition technologies continue to mature, we only expect this trend to grow, as some smaller organizations still rely heavily on paper and handwritten information that can now be processed at greater volumes.

Domestic providers can be attractive options

Contracting with a third-party provider in India is only about 20 percent cheaper than contracting with a domestic provider. Many companies are finding that it’s beneficial to pay that premium for cultural understanding and conversational ease. In fact, in financial services, several companies are giving their customers a specific option for local support—for a nominal fee.

These are just a few of the current trends in outsourcing. For more information on any of these trends or for questions regarding outsourcing best practices, please give us a call. 

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