The longstanding argument for many businesses is whether shared services or outsourcing is best. Business process outsourcing refers to the contracting of an outside vendor to handle certain processes and services, whereas shared services refer to the consolidation of certain business operations that are used throughout multiple parts of a business.
Pros of Business Process Outsourcing
When companies choose to outsource certain services, such as finance, HR, and IT, it can come with some large cost savings. There is no need to worry about the hiring and training of staff who would normally fulfill these roles. BPO partners are responsible for upgrades to the technology and other maintenance that would otherwise have been spent by their client’s company. By contracting a vendor that specializes in the line of work you are looking to outsource, often the work is able to be done more efficiently. This is due to the access to better processes, technologies, and economies of scale.
Not only is cost a factor but implementation as well. Services are often implemented much more quickly with offshore resources because it is in the vendors’ interests to take on these clients with more speed, as there is no need to meddle with the businesses’ internal politics. Because vendors are a bit more removed from the business, they are able to offer more flexibility to their clients.
Pros of Shared Services
There are also pros to consolidating business functions that would normally have their own departments onsite. Many national corporations have adopted this model to assist in their HR, IT, and back office support functions. Like BPO, this model helps with reducing the number of staff members on site, saving the company money on recruiting, hardware and software.
Companies also benefit from shared services by being able to focus more of their efforts on managerial experience and technical expertise. This model is more in tune with the company’s changing business needs, as it is not a separate vendor, but a part of the larger organization as a whole. Because of this, strategies and proprietary information are not shared among outsourced vendors and remain in house.
Which is right for me?
Both of these models come with their own risks and benefits. Companies that are seeking more flexibility, a wider range of support, and access to technological innovations at a lesser cost may seek out BPO. Much of the IT functions of a company are outsourced, as access to higher technologies comes at a much lower price.
Still unsure which model is best for your business? Our highly experienced team at Credence Global Solutions is here to guide you to make the best decision for your company. By providing the highest level of service and management, we are here to guide you through your financial transformation. Contact us today for more information.