New research from the Grant Thornton International Business Report (IBR) reveals that two in five business leaders globally either currently (or plan to) outsource back office processes. The cost savings and process efficiencies outsourcing can provide are recognised across the world, although some business leaders remain reluctant to lose control of a key process.
The IBR reveals that outsourcing is most prevalent in Latin America (51%), although large proportions of business communities in North America (43%), Asia Pacific (42%) and Europe (36%) have also engaged with outsourcing providers (or are planning to).
The processes businesses are most likely to outsource include tax (49%), IT (46%) and HR and payroll (36%). Of those businesses with no plans to outsource, 44% indicate an unwillingness to lose control of a key process.
Samantha George, head of outsourcing at Grant Thornton UK, said: "The results suggest that the use of outsourcing providers in the mid-market is well-entrenched across the globe. Outsourced solutions now exist for a considerable number of service lines, and providers have become expert at tailoring solutions to the individual needs of their clients. This is positive news: outsourcing can free up resources tied into back-office processes and put them into higher value-add functions, helping to drive business growth.
"Of course, the results also show there is room for further penetration in the market by engaging with the three-fifths of businesses which are not currently considering outsourcing. The results highlighted the popular misconception that outsourcing a process means losing control, whereas, in fact, it can help senior leaders at dynamic companies take a step back and gain a clearer picture of how the business is performing against its strategy. This suggests the industry has a challenging, but eminently achievable, marketing task on its hands."
Among those businesses which currently (or plan to) outsource back office services, 57% globally cited improving efficiencies, marginally ahead of reducing cost (55%), as the key drivers. In both North America and the EU, the number of businesses citing improving efficiencies as the key driver of outsourcing rises to two-thirds. And of those businesses with no plans to outsource, a requirement to find cost savings (41%) or process efficiencies (33%) are the main reasons that would encourage them to consider it.
Business leaders in the developing economies are more likely to use outsourcing to access expertise; 46% of BRIC businesses cite better access to expertise as an outsourcing driver, compared with 39% in the G7, and 45% cite mitigating risk through using specialists, versus 35% across the G7.
Samantha George continued: "Businesses around the world recognise the value outsourcing can offer their organisation in terms of driving efficiencies and reducing costs. Specialist outsourced providers enable this through their use of specialist people, streamlined processes and dedicated IT systems. And in emerging markets, it is noticeable that businesses are looking to tap into skills and expertise offered by outsourcing providers that might not necessarily be as readily available locally.
"The results clearly show that outsourcing is worthy of serious consideration. Leaders of high-growth businesses can quickly find their inbox filling up with administrative issues. Outsourcing can help them manage their workload and focus on priorities, boosting productivity and results, providing them with a competitive edge.”
For a copy of the full report (Outsourcing: driving efficiency and growth), please click here.