Outsourcing Benefits

Variable Costs

Regardless of the products or services provided, employee related costs and the associated overhead are relatively fixed for most companies. Outsourcing turns these fixed costs into variable costs. Because of their greater economies of scale, outsourcing providers can price their services for variable demand.

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Reduced Investments in Assets

Investments in staff training, other employee development, process reengineering, restructuring programs and so forth all involve investments for the future. Investments in fixed assets such as computer systems, though depreciable over time, usually involve large up-front expenditures. Outsourcing effectively transfers these investments to the future by only paying the outsourcing provider for services rendered. Furthermore, since it is in the interest of the outsourcing provider to maintain its service advantage by regularly investing in people and systems, the user of outsourcing services can be assured of access to state of the art technology and current best practices.

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Production Improvements

On the other side of the investment equation is the productivity gains that result. Investments in technology will provide immediate (hopefully) productivity gains, but the rate of gain soon diminishes without additional investments in systems and people. Partnering with an outsourcing service provider will ensure not only short-term productivity gains, but also ongoing improvements without the need for additional investments.