Franchise organizations have always struggled to meet their needs for the administrative and professional services that support their core program work. Although some early efforts have been promising, outsourcing has yet to become the revolutionary business practice envisioned by its earliest and most ardent supporters. A brilliant and simple concept – let someone else handle your routine business processes so your company can focus on its core competencies. Companies are looking to outsourcing to help them manage their growth. Whether they’re expanded organically or by acquisition, their new girth is making the old do it yourself approach to back office business look increasingly less attractive.
Tracking customer profitability and credit issues becomes easier and the organization gains a better understanding of its cost base. By creating the right outsourcing relationship, the partners are able to share the risk of delivery while contracting for business outcomes using appropriate metrics.
On the surface, CEO may refuse to delegate control because they are unwilling to let go of control in order to really build a more effective organization. Much larger number leaders are unwilling to relinquish control because they do not think the provider really understands how their organization works. Or they may simply have a hard time justifying increasing overhead expenditures when no new revenue is on the horizon.
There are several reasons for outsourcing your work:
– Reduce operating costs and reduce capital investments
– Increased flexibility and responsiveness
– Increase organizational impact by allowing staff to focus on core business
– Access to technology, skills and insights not otherwise available or affordable
– Improving quality and providing an alternative to building capacity in-house
– Improved management and control
– Improved credibility
– Accelerating growth
Many of our respondents noted that they already outsource many functions (bookkeeping, It, PR, marketing). And like every model there must be some barriers to this.
– Loss of managerial control
– Organization culture
– Not wanting to be dependent on an external supplier
– Inability to find specialized skills at a reasonable rate
– Quality Problems
– Protection of intellectual property and confidential or sensitive information
Back office functions, such as Information Technology (IT), Human Resources (HR) and Finance and Accounting (F&A), have executed complex and innovative strategies to deliver cost savings and improved service levels which seem commonplace today. With improved efficiency having already been achieved through activities such as outsourcing, where is the next competitive advantage for your organization?