04/10/2008
The market for outsourced goods and services is enormous these days and popular in all genres. Any business will benefit from outsourcing. The pre-recession jitters and globalization has resulted in easy access to expertise from any region of the world. In previous years, businesses were geographically limited in their ability to use resources. Gradually, larger businesses began to take advantage of the opening global markets to tap resources from where they were most abundant and affordable.
While the concept of outsourcing started with the larger companies, technology soon allowed smaller businesses to gain access to the world markets. Currently, resources in terms of goods and services travel all over the world to reach businesses that require them. Fifty years ago, it was inconceivable to use services from across the country, not to mention across continents and today, we don’t even notice how many services are outsourced around us from remote locations.
The biggest decrease to small businesses is in cost. Today, any project can be outsourced. Why go thru the hassle of hiring someone and paying all of those taxes and related fees? Not to mention the potential legal issues of hiring a staff. Liability issues, discrimination laws, the list is huge.
The next benefit is a decreased management overhead. This is really important if you're a small business. You shouldn't be spending money hiring a manager when money is too tight to effectively advertise. Simply hire someone as an independent contractor and immediately decrease your overhead.
Many of the outsourcing hubs are currently in developing countries, simply because there are specific resources available that are low cost and abundant. Due to the socio-economic factors influencing these regions, they have become known as cost effective nations. Employees around the world are getting paid salaries that convert to a comfortable amount in their home countries even though in dollar terms they sound small. This difference creates an opportunity for a business in the US or UK to spend less and gain more, while the outsourced employee is also adequately compensated.
Eastern Europe has opened up to the outsourcing boom and so are other parts of Asia, India and China. A business that is able to use resources from areas where they are abundant allows the business to save money and yet achieve high quality. This in turn affects the bottom line profitability of a business and gives back shareholder wealth to the owners or stockholders.
Another valuable result of outsourcing is that it allows the business to utilize resources at the most competitive price. This means that in time, certain resources will become viable in the developed nations and will be the sole means of the cost effective nations or wherever they are most optimally produced. At the same time, the developed countries will offer certain expertise that is optimally produced by them and will not waste time and resources trying to expensively duplicate resources coming from the low cost nations. This will allow for an equitable distribution of resources across the globe, all being produced where it is the most affordable to produce them. The world is already heading to this balance point and this should make businesses a lot less expensive to run.
Schemion Frederick is the CEO of MyBusinessGenie and provides outsourcing in all business genres. He has 20 years of experience in helping small business owners decrease their overhead and increase their profitability.
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