subscribe: Daily Newsletter

 

When the going gets tough … outsourcing looks good

0 comments

South African companies are faced with a number of challenges brought about by rising interest rates, inflation and critical skills shortages – and many of them are under severe pressure to deliver the level of results that shareholders expect.

According to Pule Mokoena, group executive at Innovation Group, those companies that survive and prosper during hard times are led by managers who are able to contain business costs and improve business performance without impairing current and future growth.
"One of the ways to achieve the streamlining of costs and the improvement of business processes – at the same time – is to turn to outsourcing specialists, whose expertise in streamlining, and improving, business processes can assist companies to carry on growing during good and bad times," he says.
"Outsourcing has the means, for instance, to improve delivery channels – thereby improving customer satisfaction. Increased customer satisfaction – especially during trying times – can lead to an increase in revenue and bottom-line profits.
"Another enormous benefit is the capacity to build and improve your brand and image through your outsourcing partner – provided they are not some "fly by night" enterprise and know what they are doing.
"Additionally, by streamlining processes, more of top management's time is freed up, allowing them to spend more time on making important decisions and fine-tuning strategies. This gives companies a noticeable advantage, both from a short and long term perspective," Mokoena says.
Craig Young, MD of Unison Communications, says companies should find more ways to cut operational costs, especially in tough times.
"The problem is that companies are more laid back when it comes to cost watching when times are good – and are slow to look closely at operational efficiencies during harder times. In fact, pencils should be sharpened with regards to costs in good and bad times."
He says it is interesting to note that companies will rather consider putting a freeze on employment, or instituting staff cuts, rather then going the extra mile and cutting other costs – such as looking at ways to cut communication costs.
"Telephone abuse is rampant in the corporate world and there are ways to pinpoint areas of abuse that can be easily addressed, thereby saving companies a lot of money. By opting for this route, there is often no need to cut back on training, R&D and an ongoing investment in staff."
According to recent global research conducted by Accenture, outsourcing not only helps a business to contain costs, it also assists companies to grow. The reason cited for this is that it gives companies the ability to gain strategic advantages over the long-term, allowing them to focus on core activities – and to implement these better then their competitors.
Of the 35 companies who harnessed outsourcing in order to focus on core business competencies, 75% believed that they obtained this objective.
"A company does not have to beef up when it opts for the outsourcing route. It does not add huge amounts to overheads, as outsourcing allows companies to improve business processes and improve staff efficiencies. This beefs up growth – and the bottom-line," says Mokoena.
He says outsourcing can also assist in the building of a company's brand, which can offer substantial benefits – both in good and bad times.
"If a customer receives bad service he immediately has a negative impression of the company. This affects the company's market branding negatively. However, if a customer receives a high level of service, the branding of the company will naturally be improved. Outsourcing can do this.
"Take, for instance, a customer who is phoning in to inquire about his newly-purchased vehicle's after-sales warranty. If he battles to get advice or assistance, and is passed from pillar to post, spending too much time hanging on the phone – or just doesn't get advice timeously, he is going to have a negative view of the company. Its brand can tarnished.
"However, if a company hires an outsourcing specialist, whose job it is to improve efficiencies and customer service, then the customer experience can be greatly improved. This is good for business.
"By implementing and manning an efficient call centre, or just by improving business processes, that client phoning in to inquire about his vehicle's maintenance plan will be handled fast and efficiently. This builds the overall brand and, over the long term, adds markedly to the company's reputation and will, without a doubt, lead to its continued growth."
Unison's Young adds that cutting operational costs does not relate to a drop in quality and service levels.
"Squeezing more out of operational efficiencies does not mean a sacrifice in other parts of the business, such as customer service. By making use of experts in their fields, companies are able to leverage a host of advantages.
"Just from a communications point of view, we can cut costs significantly, in some cases 20% or more – it is also possible to cut communication costs when it comes to the manning of call centres, which are often used for outsourcing purposes. Problem areas can be highlighted and rectified. This can not only lead to better customer service, but it can also cut real costs," he says.