Now a question arises, why move a function to the back office, outsource provider or a shared center. The answer is very simple – consolidation, standardization, best practices, specialization, labor arbitrage, reduce software license costs, reduce management and infrastructure requirements …. and the list goes on. There are multiple reasons for outsourcing. The end result is for sure reduction in cost, better processes, satisfied customers and stakeholders etc.

See the graph below, it indicates what you can actually gain / achieve over a period of time. You sure can achieve up to 50% cost reduction in a span of five years or so. This is an articulation of the direct benefit only. If you add the indirect benefits like release of infrastructure for other functions, you may achieve a saving of 70-80% also. (This is for outsourcing organizations)

As you can see, the benefits are numerous, it depends what you desire to have as the key objective of outsourcing for your organization or your client. This applies to both the outsourcing organization and the provider. If your objective is not clear, somewhere you will hit a roadblock.

My objective for this blog is not to look into “why outsource”, but how can you make outsourcing really successful. This post forms a part of the startup introduction. There are numerous blogs and websites which give you inputs on “why outsource?”. You can do a search and refer to them for additional details.