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How Outsourcing Can Provide Process Efficiencies to Allow Scale

Can outsourcing really provide Process Efficiencies to Allow Scale? Deloitte predicts the global outsourcing industry will generate $731 billion in revenue in 2023. One of the key drivers for this huge result is a tightening global economic environment and the need for businesses to look at financially responsible ways to grow and scale.

Businesses both booming and struggling in the current economic environment can benefit from the cost efficiencies found with outsourcing. Outsourcing forces businesses to ‘get their house in order’ so as to build a sustainable growth model that will see them through the tough times as well as the booms.

To be scalable it is important that businesses do not rely on individuals, but on processes and systems that can easily be followed by anyone, meaning the business is future-proofed against the ebb and flow of staff movements, but also can easily be exploited as more staff are put on to manage a growing business.

Growth and Scale guru, Verne Harnish has advised thousands of companies on growth-related issues and shares practical tools and techniques for building an industry-dominating business in his best-selling book, Scaling Up.

He suggests setting a “Big, Hairy, Audacious Goal” (BHAG) –  goals at their finest! Often BHAGs are so audacious that they require some thinking outside of the box to make them happen. This is where outsourcing can really provide process efficiencies to allow scale.

Decisions equal success, and the Scaling Up methodology has effectively been built around four decisions needed for growth. By focusing on these four key areas businesses have been able to scale 10x! The four pillars are:

 

People

Attracting and keeping the right people, giving them clear accountabilities and metrics. Construction and engineering projects often comprise several sub-contracted entities, with project managers overseeing the success or outcome of the work. Because of the multi-faceted nature of everyday operations, these sectors outsource to fill necessary positions in areas like back office functions, HR, IT, accounting, 3D modelling, and drafting services.

 

Some roles that are frequently offshored include:

 

One of the main advantages of outsourcing staff is its cost-effectiveness. The rates are more affordable than hiring locally, meaning companies can access skilled workers and a competent workforce while still saving money.

A great benefit here is outsourcing enables you to try new strategies and tactics to grow your business, because the opportunity cost isn’t as great as it would be if doing it locally and you can therefore minimise the associated financial risks.

 

Strategy

First of all, have a strategy, and ensure it passes two tests: Firstly, does what you’re planning to do really matter enough to customers? And secondly, make sure it differentiates you from your competitors.

Make sure you can concisely articulate your strategy and ensure everyone in the business is aligned and on the same page without wasting sales or operational energy on activities not profitable or useful to the business.

Outsourcing can be a key enabler of scaling up for businesses. Outsourcing to Vietnam means your business can focus on its strengths and free up local staff to concentrate on driving the strategy, working on high level projects and executing on the high value tasks.

 

Execution

Implement three key habits:

Set a handful of priorities – the fewer the better.

Gather quantitative and qualitative data daily, and review weekly to guide decisions.

Establish an effective daily, weekly, monthly, quarterly, and annual meeting rhythm to keep everyone in the loop.

In Scaling Up, Verne highlights the Rockefeller Habits, which are an execution framework. These ensure that the executive team is healthy and aligned, that a communication rhythm is established so that information moves through the organisation accurately and quickly, that  every facet of the organisation has a person assigned with accountability for ensuring goals are met and ongoing employee input is collected to identify obstacles and opportunities.

By tightening up execution habits, businesses can dramatically improve gross margins and profitability while reducing the time it takes for everyone to complete their work.

 

Cash

Businesses should calculate their Cash Conversion Cycle (CCC), which measures companywide how long it takes between when you spend a dollar (marketing, design, rent, wages, etc) until you get that dollar back. Neil Churchill’s Harvard Business Review article “How Fast Can Your Company Afford to Grow” provides winning formulas for calculating the cash conversion cycle.

Cash is king. Scaling your business with outsourcing the non-core tasks frees up your time and resources for other crucial responsibilities, reduces overhead costs, improves workflow, delivers better value to customers and frees up more budget for growth.

 

Growing and scaling any business requires the senior executive to pull it apart and put it back together again whilst building and documenting systems and processes along the way. Only when you have done this will you be able to accurately identify where the cost-efficiencies lie; then you can exploit the system for growth by investing in more resources. Outsourcing provides a powerful opportunity for businesses in this position to become truly global and truly focused on growth.

 

To learn more about process efficiencies to allow scale and how to outsource to Vietnam, Contact us today.

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