Importance of Outsourcing Companies during the Recession

In modern times with the recession still in place many companies are looking to reduce costs, not only to keep themselves from closing down but also to have an effective input in there specific markets.  Due to this since early 2008 we have seen a great increase in outsourcing general office duties to offshore clients and companies.  All of the outsourced jobs provided companies to reduce internal costs that were costing them more then they could afford.  Many smaller businesses chose to outsourcing as a key to there existence, this was due to the fact that companies such as telecommunication firms realised that if the client doesn’t need to meet the person they are speaking to face to face then why pay someone so much to talk over the phone?  Instead they started using outsourcing companies to outsource there jobs offshore with the main bulk of the business still in there home country. 

Three, a mobile phone communications company in the UK is a prime example as one of the larger companies to start outsourcing.  They provided call centres in the Asian subcontinent which saw them rise up the industry faster then other challenging companies.  With the outsourcing they were using, call centers; they saved on average £2080 per month per employee if they were to have the same service in UK.  Companies such as this who have outsourced are known to expand rapidly as the overheads and other costs are drastically reduced. Three were a prime example of this, they appeared with the cheapest monthly contracts leading to other companies having to rethink there strategy the resort to outsourcing, hence why monthly mobile phone contracts are now more competitive then in previous years.  Mobile phone companies are not the only ones that have benefited from outsourcing work effectively.

A different type of business example is Barclays, they have been outsourcing work since 2004 when they outsourced to India and created 500 jobs for the cost of 250 UK jobs.  More companies are jumping on the bandwagon as outsourcing is becoming cheaper and more cost effective. The initial program was in turmoil as there was a strong language barrier between the two continents of communication.  This initially deterred companies from outsourcing.  Outsourcing companies such as Staff India came across this and used it to there advantage.  Teaching there staff to speak in a neutral accent. This has enabled them to be able to affiliate with companies such as De Veres Property Investment, companies such as this have most of there administrative work given to outsourcing companies such as Staff India.  They have a handful of employees in the UK which actually deal with the face to face meetings with clients and all back of house duties having been outsourced.  Another branch of Staff India group is the Derivative Trading branch.  Trading companies such as this have outsourced many jobs offshore. This company in particular has its senior partners in the UK with frequent travelling to there outsource destinations.  All other employees are employed via outsourcing.  Meaning, all trading and research is done in the companies’ outsourced locations such as India and Bangladesh. 

Outsourcing companies have a great benefit as outsourced employees are not in the same building, and costs such as building space (rent, bills etc) are prepaid for the employee hired.  If any meeting is needed free communication is available via Skype, enabling the parent companies to be able to hold voice and video conferences including that employee.

Another popular group of companies that use outsourcing are Internet providers, such as Pipex and O2.  The only employees they need in the home country are the installation and repairs team.  Everything else is done over the phone, so outsourcing call centres saves on there costs drastically leaving customers with cheaper yet effective services and the companies having larger profits as seen in the case of O2 in 2009 with sales increasing by 9.7% and the companies overall profits increasing by £7m over the year.  As did the Internet companies such as Pipex, which since outsourcing began in 2006 doubled its profits in the first year of business.

In conclusion, outsourcing companies have benefited from using offshore employees as seen in the recession.  It’s provided more jobs in other countries but has also allowed companies to continue trading there services in there home country.  Consumers were previously against the idea of outsourcing as they believe that what’s happening here is unknown to foreign countries.  But have now grown to the idea that they are advancing in technology, knowledge and training of ways to aid the situation more suited to us. This means outsourcing call centres and other duties are more recognised and are receiving a friendlier approach from the consumers enabling more companies to jump on the bandwagon and reduce there own costs.

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