Top 3 Reasons Companies will Outsource in 2012

January 1, 2012

As the competition vying for each buyer gets stronger and stronger, the direction for 2012 is Yield in order to fund strategic agility and speed to market.

  "Do what you do best and outsource the rest!" - Tom Peters, Best-Selling Author and Business Strategist 

Strategic Agility: Responding to market changes makes the difference between innovators and leaders in the industry, or stagnation and dying. A recent example of strategic agility is Google Plus. As large as Google is, they were still able to quickly recover from the disaster which was Google Buzz, and come out with a much more robust effort in the form of Google Plus. 

The demand for strategic agility may be regulatory, competitive, customer, or market driven and can vary across the geography of a company. During a recent survey conducted by the Inavero Institute, 74% of respondents reported that in order to keep up with increasing business challenges, organizations must be highly adept at comprising the right skill set with the correct need. Outsourcing allows for the rapid scaling up or down of teams without the need to slow overall organizational momentum, and can, in fact, substantially increase it.

Speed: According to a 2011 study by researchers at Duke University and the University of Massachusetts, market expansion (growth, access to new markets, global strategy) and speed to market are the strongest drivers moving organizations to outsource key areas in 2012. Consumers and businesses expect monthly, if not weekly, feature updates on technology. Waiting for the large yearly upgrade can be the difference between MySpace and Facebook.

Yield: Clearly, the bottom-line numbers matter, companies have increasingly begun to focus on outsourcing as a competitive strategy by means of vendor partnerships, in addition to a cost savings tactic. Thomson Reuters’ projections show a potential savings of nearly 45% in outsourcing for 2012, not only in staff cost reduction but also in the areas of technology, regulation, and processing. Ultimately, when the decision to outsource is made, two fundamental questions need to be asked: “which activities should we outsource, and which tasks need to remain in house”. Outsourcing allows you to actually focus on your mission statement and not the non-revenue generating activities that can take an inordinate amount of your valuable time.

The single most effective thing a company can do to quickly improve in these areas is to partner with a service provider to outsource non-core aspects of their business. We live in a more competitive market than any previous time in business. Only lean, focused, purposeful companies will prosper.