SME Outsourcing Benefits

In a published article at Independent, Head of General Electric Jeff Immelt's sentiments about outsourcing surface again. Outsourcing is yesterday's model, and reshoring is the name of the game. General Electric has brought back some of its manufacturing in-house, but that isn't likely to instigate a domino effect in global business.

BPO and The Australian SME 

Small and medium businesses make up 99 percent of Australian businesses. They employ about 70 per cent of the workforce.

According to the Australian BPO Report 2012, the demand for business process outsourcing (BPO)  services is expected to grow by 20 per cent in 12-24 months. The demand is driven by global expansion and focus on core business. For manufacturers and retailers, carbon tax was also a major reason.

Top outsourced services are back office functions such as payroll, and accounting and finance. Within the next two years, online marketing services, document management, and HR functions are seen to increase. For those who prefer offshoring, India, the Philippines, Singapore, and New Zealand are popular choices.

Outsourcing enables small and medium businesses to access solutions that were once monopolised by large enterprises.

SME outsourcing benefits are:

Efficiency

Everything that entrepreneurs need to run their start-up costs something, from the CEO down to the post-it notes. Investment is not just money, but also time and effort. SMEs can collaborate with service providers for a technology and/or staffing solution.

Expansion 

SMEs can tap into viable markets in emerging countries. It's a fact that Asia is not just about Chinese factories and Indian call centres any more. BPO has gained a foothold in the region. HfS projects the industry to grow at 5.1 per cent in 2013 with a compound annual growth rate of six per cent up to 2017.

Emergency Exit 

SMEs can set up offshore operations to reduce the risk of exposing one aspect of their business to unpredictable events. Global banks have operations in different regions to reduce the impact of political instability, economic slowdown, and natural disasters. 

Flexibility and Scale 

Start-ups can scale up their operations without biting more than they can chew. They can add infrastructure, staff, and business processes that they can't afford to maintain in-house.

Large enterprises can also benefit from outsourcing, but some prefer to reshore or insource. For anti-outsourcing companies like GE, it's more about bringing back jobs that were once tossed overseas. This is an idealistic, but not always practical solution. Is this a strategic business move, or a PR driven decision to attract consumers that share their sentiments? Moreover, they reshore because they can afford it.  

As long as there are SMEs and other businesses that recognise the strategic benefits of outsourcing, its ultimate end is highly unlikely. Moreover, outsourcing has proven itself to be a dynamic business tool that continues to adapt with the help of technology.