In today's changing economy, businesses are looking to cut costs while improving efficiency. Sales Process Outsourcing (SPO) is just one of the techniques used by more companies to improve the effectiveness of their sales teams. This freely available white paper provided by IntelliConnection lists the pros and cons of outsourcing and describes the process of selecting a top-notch SPO company.
The term outsourcing is defined as the transfer of the performance of a business function to an outside service provider. For many years, large, diverse companies contracted with outside suppliers for parts and components used in their manufacturing processes. It was found to be less costly and more effective to use the services of smaller manufacturers to feed the assembly lines operated by the large manufacturers of a variety of goods like automobiles, appliances, electronics, building materials, production machinery and the like. The application of outsourcing to the manufacturing process often resulted in lower operating costs, higher margins and ultimately, lower consumer prices.
The success of outsourcing applied to manufacturing was seen as a good thing by other industries. Soon other company functions were being outsourced; customer service, telemarketing, credit and collections and other seemingly routine tasks were being taken over by smaller, business specialist firms. The emerging economies of third world countries made many American companies turn to the Far East and India for the English speaking staffs of companies set up just to perform telephone services for USA companies. Soon, many Americans picked up their telephones at home only to hear a heavily accented voice on the other end, either soliciting or collecting or performing some other routine customer service function. The cost savings of using low cost labor from overseas had extended into more than the manufacture of athletic shoes and electronics. The use of overseas services is sometimes referred to as “off-shoring.”
American companies in other than consumer goods began to evaluate outsourcing of internal functions in order to reduce and control costs. A small company specializing in one business function like accounting, customer service, data processing or telemarketing was able to provide these services at a lower cost than an in-house department and there were no costly company benefits to provide. Additionally, an annual contract for outsourced services was a predictable, fixed expense and made budgets easier to manage.
Outsourcing, other than manufacturing, typically involved functions over which a company did not need to have direct control, but still needed to monitor: Accounting, IT, bookkeeping, customer service, telephone solicitation (telemarketing), sales lead development, design and engineering, marketing, promotion and advertising.
Cost Savings - The reduction of the overall cost of the service.
Reallocation of Resources – Divert the costs of the outsourced service to other areas of the company.
Predictability of Fixed and Variable Costs – Provided better cost control.
Quality Improvements – Specialists often perform better.
Specific Operational and Technical Knowledge – Technical specialists give access to broad experience and expertise.
Access to a Larger Talent Pool - A source of specific skills such as engineering, science, design, marketing and sales support.
Transfer of Risk – Outsourcing supplier accepts the risks associated with the functions they contract to perform.
Outsourcer as a Change Agent – Transfer of functions that need to be changed but cannot be accomplished in-house.
Increased Capacity for Innovation – Augment the in-house creativity with outside specialists.
Accelerate Product Development – Outsourced capability hastens time-to-market.
Standardized Business Practices and Processes – Outsourcing gives access to services and skills heretofore only available to larger companies.