Outsourcing 2.0

Outsourcing in the UK has undergone something of a renaissance. Once a poor relation as companies fled domestic provision in favour of low-cost offshore options, predominantly on the Indian sub-continent, the UK outsourcing sector has seen a revival in interest as companies look to secure the benefits of outsourcing for their business.

Cost is the main attraction of outsourcing for many businesses. Outsourcing to a UK provider can generally be expected to generate savings of around 10 to 15% when compared to the costs of equivalent provision in house. These savings can be significant; by the time a company has reached the scale that requires outsourcing, it’s likely it will improve their bottom line by a healthy six- or seven-figure sum.

These savings are accomplished by a mix of the scale and expertise that the outsourcing providers can offer. Most providers will have multiple clients, enabling them to distribute some fixed costs, from premises to management, across contracts. And by specialising themselves, their own processes can be streamlined and cost-efficient.

A typical provider will usually operate in regions where both the infrastructure and staffing costs are low by UK standards. A northern outsourcing vendor will have an immediate advantage over a southern business considering in-house provision, such as lower property costs, a lower cost of living, and lower wage bills. On top of this, they can keep costs lower because their support services are dedicated to a single function. Clients might need customer support, finance, HR, and IT teams that can manage a range of disciplines and areas, and outsourcing companies in the UK can supply teams that specialise in one field.

And finally, the scale means they can be efficient in their use of staffing resources. This is not just the use of supervisors and managers, but also utilising staff across their contracts. They do not, for example, need to build in as large an overhead to cover for staff absence, and with better opportunities for development within a larger organisation, they can save on recruitment and training needs.

The net result is an industry that, just like its offshore counterparts, can offer a significant saving to their clients—a welcome fact for businesses that need to keep their costs as low as possible to meet the conflicting demands of customers wanting lower prices and investors looking out for profits. However, the benefits of outsourcing in the UK are not just limited to savings. Anyone considering an outsourcing partner should also look at how it can improve their business.

One often overlooked benefit of outsourcing is that it allows businesses to focus on their core product or service. Running in-house operations can be costly, not just financially, but also in demands upon the strategic leadership capacity. But perhaps more importantly, good outsourcing can improve customer service.

One of the reasons that UK outsourcing has seen a revival in recent years is because of the failures of offshore providers to match customer expectations. The problems frequently arose because of communication difficulties, and while there may sometimes be issues with the UK’s regional dialects, the common culture means that these can be rapidly overcome because of the rapport between agent and customer.

Ralf Ellspermann, who has worked in offshore outsourcing for over twenty years, recounts how this revival has benefited his Philippines-based company, PITON-Global. “Many of our clients come to us after a bad experience elsewhere,” he explains. “The Philippines has a high level of English-language proficiency and a strong understanding of Western culture. We found our clients usually failed to find that elsewhere and paid the price in poor customer service.” With savings of up to 15% in the UK and up to 50% in the Philippines, it makes little sense not to outsource, as long as you make customer experience the priority.