Strategic Benefits of Outsourcing

Global competition is the most important issue facing top decision makers in some of the world's largest companies today. To meet this challenge, leading companies worldwide are focusing their resources on their core competencies as a business strategy to compete profitably in a global market. Outsourcing is paving the way for leading companies to compete globally and increase profitability into the new millennium. The practice is gaining widespread acceptance throughout the United States, Europe, South America, and Asia Pacific as an important new management tool to improve performance and profitability, gain competitive advantage in the global marketplace, and ultimately build shareholder value.

Benefits Of Outsourcing

Why are so many companies moving to BPO as a management practice? Because business leaders increasingly recognize its strategic benefits. Among the executives interviewed:

• 87% said that BPO allows their companies to focus on their core competencies.
• 76% said that BPO helps their companies achieve greater efficiency without having to invest in people and technology to achieve that efficiency.
• 66% said that BPO helps their companies become more profitable, leading to improvements in shareholder value.

The importance of shareholder value as a strategic benefit of BPO was noted by three out of five (62%) of the senior executives, who said that increasing shareholder value is an important factor in considering BPO initiatives. On a global basis, top decision-makers in Canada (81%), Australia (80%), and United States (75%) cited improved shareholder value as a principal strategic benefit of BPO programs. Executives in Europe (54%), South America (48%), and Japan (16%) placed less emphasis on shareholder value. Benefits of BPO Worldwide

Achieve cost reductions	79%
Focus on company's core business	75%
Improve service quality	70%
Maintain competitive edge	67%
Increase shareholder value	62%
Obtain outside expertise	61%
Have access to advanced technology	59%
Achieve revenue enhancements	58%

The Benefits of Outsourcing

• Financial restructuring:
  Improving the business's financial position while reducing or at least containing costs
• Core competence:
  Redirecting the business and IT into core competences.
• Technology Catalyst:
  strengthening resources and flexibility in technology and service to underpin the business strategic direction.
• Business transition:
  Facilitating and supporting major organization change.
• Business Innovation:
  Improving and innovating in processes, skills and technology, while mediating financial risk through the vendor, in order to achieve competitive advantage.
• New market:
  direct profit generation through joint ventures and vendor partner.