Why outsource business processes?

We explain how outsourcing works and what its advantages are.

Outsourcing is delegation. A company hands part of its non-core business processes to external specialists - for example accounting or HR administration - while it focuses on key tasks and growth. It is a good way to optimise operations and stop spreading resources over routine processes that providers can handle faster and better.

In this article we look at the advantages of this approach and dispel the myths about outsourcing.

Hand it over and forget: 4 main benefits of outsourcing

Research by McKinsey and Yankelovich Partners shows that outsourcing reduces company costs by up to 21% within 1-3 years and affects every aspect of the business: it optimises business processes, improves service quality and increases competitiveness.

Here is why this happens:

1. Outsourcing cuts business costs

The benefit is not always obvious at first: why bring in an external team if hiring a specialist in-house looks cheaper? But you need to look at the whole picture. By outsourcing part of your processes you reduce costs: you no longer pay for professional development or internal training, workplace upkeep or IT infrastructure.

2. You can bring in the best specialists

You get not one person's knowledge but the experience of a company that solves such tasks regularly and has refined its processes across hundreds of projects - calculations will be accurate, deadlines met and documents error-free. That is simpler and cheaper than finding or growing the perfect in-house specialist who can do the job at the same level.

There are also specific tasks, such as maintaining military records in a company. Some of our clients would rather pay a fine than find an employee who will study the legislation, get to grips with the requirements of dozens of different military registration offices and help pass an inspection. It is easier to give the task to an outsourcing company than to work it out yourself.

3. The company is not dependent on staff turnover and workload

An in-house employee may resign, go on vacation, fall ill or move to a competitor. There is no guarantee this will not happen at the worst possible moment - on the eve of an inspection or a reporting deadline. With outsourcing there is no such problem: you sign a contract and the partner company commits to the result. There is always a team that knows your project and is ready to step in.

4. The company can focus on growing the business

Routine tasks such as paperwork or payroll eat up a lot of time. It is better to invest that time in strategically important work - developing people or improving the product. Outsourcing frees up your head and hands. You do not have to dive into the finer points of legislation, monitor changes constantly or worry before a tax inspection.

So why, with such obvious benefits, do only 4% of companies use outsourcing?

McKinsey data shows that outsourcing in Russia is still treated with caution. The reason is entrenched stereotypes. We have collected the most common ones and commented on them from UCMS Group's experience:

Concern 1. Moving to outsourcing means losing control over business processes

It may seem that outsourcers will take over the management of the company's affairs, but that is not the case. We recommend the best solutions but do not interfere in the client's business. The client can request a report on our actions, and the final decision is always theirs.

For example, if we take on a payroll verification, we prepare a document with the errors we found and warn about the risks. How to proceed and which risks matter for the company is the client's decision. We are always on their side.

Concern 2. Outsourcing may lead to a data leak

It may feel risky to let an outsider into the inner sanctum - the company's reporting. But we guarantee security and confidentiality. To make it even safer, we set out our liability in a non-disclosure agreement.

Concern 3. Full involvement is impossible with outsourcing

There is a stereotype that someone who is not on staff cannot fully immerse themselves in business processes. The answer is simple: the team can come to the client's office several times a week or work on site permanently.

Concern 4. Outsourcing is expensive

To calculate the benefit of outsourcing, it is not enough to compare an in-house salary with the cost of services. For an in-house specialist you pay contributions, provide a workplace and spend time and money on development. And there is no guarantee that human error or poor qualifications will not lead to mistakes and a fine. The most you can do then is dismiss the person.

An outsourcing company is responsible for the quality of the service. You insure your risks, get work done well and free up resources inside the organisation. Outsourcing can deliver significant benefits.

What we can help you with

At UCMS Group we have been outsourcing business processes for more than 25 years. We help clients maintain HR records and accounting, automate document flow, run payroll and handle any complex or routine task:

Hand routine tasks to people who genuinely want to do them, and invest your own time and energy in growing the business.
If you would like to try on the role of an outsourcing company manager, playour web game Cards, Money, Outsourcingand try to beat us in the ranking.

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