Understand How To Improve Your Growth by Reducing Compensation Costs
Case studies are abundant showing how lowering costs fuels growth. Sure profits rise, but savvy business leaders will reinvest and find ways to grow and achieve greater business outcomes.
Once such example is of a moving company that started lowering costs by outsourcing back-office administration jobs. These are the type of tasks in which there is not much thinking to do. Starting with processing job applications, he then integrated accounts payables and receivables.
Then this company started using outsourced talent to conduct phone marketing. This enabled the company to achieve enormous scale and become the dominant player in their market.
Another case study is of a lean company that started outsourcing using freelance talent. These home-based employees were unsupervised and had unreliable electricity and internet access. Since it was difficult to measure their performance, these freelance employees were not ideal. However, this savvy company found that rather than abandon the outsourcing strategy, they were committed to reducing costs, and achieving high growth. They instead hired an outsourced team at an established BPO center with a coordinated team of trainers, supervisors, quality control specialists, and redundant power and internet connectivity which gave them better than 99.99% reliability.
The outsourced team enabled this company to achieve a Top 10% ranking among their peers.
Finally, consider the following from Outsource Accelerator:
Many companies embrace outsourcing to reduce costs, though this is by no means the only benefit to contracting with businesses overseas. As Forbes recently pointed out, 300,000 jobs in the US are outsourced, and reducing labor costs is a primary reason many businesses choose to do it. The fact remains that businesses can hire a worker in the Philippines at a substantially lower rate than what they would pay a worker in the US, Canada, or the UK. It’s not uncommon for businesses to save as much as 60% on labor costs when they contract with an outsourcing firm in Asia.
With freed-up funds and higher profit margins, companies are more structurally sound, have more opportunity to grow and diversify, can invest in new opportunities, and will appear more attractive to potential investors. According to the New York Times, “Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors since you’re able to pump more capital directly into revenue-producing activities.” – Outsource Accelerator