Why Businesses Consider Off-site Resources
In 2005 a survey revealed that over 75% of Fortune 500 companies had plans to or were already using off-site resources. Fast forward 6 years, nearly all Fortune 500 companies are utilizing the expertise of off-site resources or outsourcing some portion of their business. Highly successful businesses have taken advantage of the cost-avoidance, greater flexibility, and competitive benefits available with off-site resources.
One of the most important advantages of having off-site resources is reducing overhead costs. Forrester Research Inc. found that outsourcing a task can save a company up to 17%. Smart operators know how to drive higher profitability through focused efforts on core competencies instead of non-revenue generating activities. However, non-critical tasks must still be completed. The utilization of off-site resources means these same tasks can be completed for less money, and in many cases less overhead.
Leveraging resources requires a careful examination of cost per head versus revenue income. Using specialized skills to complete non-critical tasks, instead of the particular talent/skill for which the resource was hired, is a poor use of company resources. Likewise, a business may find it is lacking a specialized skill that is needed to drive business growth. Usually it is not cost-effective to hire full-time employees for short-term projects. Low cost, off-site resources provide the mechanism organizations need to complete both specialized and non-core objectives.
Savings derived from off-site resources can come from a variety of cost avoidance activities. Hiring a full-time employee is a long and expensive process that is eliminated when off-site resources are used. The time and money spent looking for a qualified applicant quickly adds up, with no gain during the search. Other expenses including drug screenings, background checks, and Human Resource protocols all burn time and money while reducing profitability. Newly-hired employees typically require some aspect of training and assimilation, entailing more time and money. Finally, future costs can be controlled through the avoidance of benefits and salary increases.
PriceWaterHouseCoopers reported that “Best practice companies in both the US and Europe estimate they are overspending by 10% and underperforming by 10% as a result of not having a fully agile and flexible workforce.” Today’s businesses struggle to capture every revenue dollar and can’t afford to lose any potential profit. For this reason, successful companies employ off-site assets that can provide the necessary resources they demand, when they demand them. Offsite resources reduce start-up times and offer businesses the ultimate flexibility. The ability to avoid the cost of paying resources for idle time translates to bottom line profits.
Fast moving projects sometimes force businesses to seek extra resources to meet the demands of these projects. An extensive amount of time and money can be spent looking for and hiring an employee with the right skills. Depending on the hiring process, this can take weeks if not months to employ the necessary help. The resulting delays will impact speed to market and hamper the competitive edge businesses so desperately need.
Off-site resources provide the mechanism companies need to quickly adjust their workforce to meet their constantly changing business environments. Full-time employees represent long-term commitments not conveniently altered. Off-site resources however, provide the flexibility necessary to meet short and long term business goals. The ability to increase or reduce workers eliminates the business risks associated with hiring and releasing employees.
Farmers have long lived with the philosophy that you make hay while the sun is shining. Off-site resources can certainly help companies ramp up and ramp down to meet boom/bust markets, allowing companies to reap profits in ways unattainable in past business cycles.
Offsite resources deliver numerous benefits to the businesses that employ them. However, one cannot fairly examine the advantages without considering the potential drawbacks. Through careful planning and execution the benefits of offsite resources far outweigh the drawbacks. Experienced companies already understand how to deal with the potential challenges. Thanks to these early pioneers, inexperienced companies are able to create risk mitigation strategies to overcome the known location, communication, and culture clashes that exist.
Location plays a considerable factor in the off-site model. Today’s telecommuting delivers the means necessary to allow off-site resources to meet business demands from anywhere in the world. Current security measures, techniques and processes allow information to be shared quickly and securely. Manufactured products require other considerations including; transportation, trademarks, and IP rights that often get lost in translation and are later found in a competitor’s product.
Location’s impact on communication can be a major detriment of offsite activities. Time-zones can impact business communications along with ideology and cultural differences. Language differences are the most common communication problem. The difference between speaking a language and understanding a language can be huge. Language barriers, if left unchecked, will have a huge impact on business relations, and that can impact customer satisfaction.
Even new employees carefully screened, interviewed and hired for a specific task with specific skills, can create a culture clash. Some reports list culture differences as the number one problem with their off-site resource. The world boasts more cultures than countries leaving room for a host of misinterpretations. Utilizing resources from different cultures necessitates forming partnerships which require patience and understanding.
Consulting groups, such as Rosewood Partners, can assist organizations in carefully planning an off-site resource model to avoid the aforementioned problems.
Rosewood’s partners come from a large background of assisting businesses with off-site resource management. With its thorough approach, Rosewood can help determine what tasks need to be accomplished from off-site resources, how many full-time equivalent employees to off-site and where to get such resources.
Rosewood has extensive experience working in the off-site market as both the client and the vendor providing services. Having worked both sides of off-siting we understand what organizations are looking for, where the margins are and how to ensure a fair deal. Through this experience we have learned the pit falls to avoid, the contract taboos, and the best methods and practices. Clients from all over the world have chosen our partners, including Asia, North and South America, Europe, Australia, Africa, Courtiers, UK, Germany, China, India, Israel, and many others. All of this experience is available by choosing Rosewood Partners to aid establish off-siting needs.
- Greater Flexibility
- In-house Resources can be focused on more critical business needs
- Get access to specialized skills your business requires in order to grow
- Use off-site resources to establish new markets with lower risk
- Get the resources you need to compete in a business deal
- Reduce overhead costs
- Gain more control over operating costs by having a scalable workforce
- Be better Prepared to handle boom/bust markets
- Reduce training costs
- Get more resources with less management