Outsourcing allows a firm to get the static out of its operations, making it better able to focus on growth, while keeping an eye on its competitors and profitability. Four hundred and forty product and service companies identified as the fastest growing in the USA were recently surveyed by PricewatehouseCoopers. Revenue and sales ranged from $1,000,000 to $50,000,000. Of the businesses surveyed, those that outsource are growing faster, larger and more profitably than the ones that do not:
*Businesses using outside service providers grew their revenues by 23.3% compared with 20.4% for non-outsourcers. A higher profitability profile was another bonus: last year, 44% of outsourcers increased their gross margin, versus 29% of non-outsourcers. Of the CEO’s who outsource to save money, 39% claim they did so because outside providers were more efficient and able to achieve economies; 29% said outsourcing reduced and controlled operating costs; 23% saved on benefits and administration; and 20% found it resulted in fewer overhead investments freeing up more capital funds. (Only 6% said they lost money by outsourcing.)*
Although strategic outsourcing has long garnered respectability in England and the more progressive and prosperous countries in continental Europe, only recently has it been viewed in North America as a cost-effective alternative to in-house recruitment. Shrinking corporate budgets and constituents demanding the most from every tax dollar have forced both the private and the public sectors of North America to rethink the way their Human Resources Departments operate.