Outsourcing is a management process in the globalized business context that has been well understood, tried and tested by successful organizations across the world. The competitive pressures arising from the emergence of a ‘boundary-less’ global economy, have spurred the faith in the process – as a means of providing significant cost savings, flexibility and improved operational performance. Outsourcing means that the organization focuses on its core competency and outsources non-core processes to organizations which can do them better, smarter and more efficiently, also resulting in cost savings and ability to free up its own management bandwidth, again, to focus better on its core functions.
Offshoring is no longer being considered a short-term tool for cost-savings – the focus is steadily shifting to long-term competitive advantage, an integral part of the global corporation’s strategy. (PwC Survey on India’s Outsourcing Industry)
Like many emerging markets, Nigeria is on the precipice of change. Foreign businesses and corporations are looking increasingly at the country as well as the African continent for investment purposes, and finding better rates of return on their investment than are available in countries that are further along in the timeline of their economic development.
While emerging markets are extremely attractive to investors, however, one of the most common problems with these markets is the lack of operational efficiency. Businesses are forced to source for every single aspect of their operations and activities, whether core to their business and whether they have required skill sets to handle same or not. Often, this means they cannot focus on their core business activities to enable them manage these functions smartly.
At this juncture, it is critical that the organizations that wish to unlock their growth potential need to concentrate on their core business tasks and outsource their non-core business activities to companies that specialize in the very operational streams that they lack experience in.
Outsourcing is a mutually-beneficial solution that will allow corporates to focus on their key strategic mandate. Outsourcing offers custom solutions to all entrepreneurs; small to medium businesses, as well as large corporations, and often saves the client money, which may be lost due to inefficient or redundant practices.
How outsourcing helps entrepreneurs and small businesses
Despite the often characteristically small size and budget of a new business, outsourcing certain key tasks can make their primary business processes run smoother. Technological advancements and infrastructural developments in more developed nations mean that those countries are working on economies of scale. As such the small business owner that wishes to handle every part of the company process could find that they are unable to compete with companies that have built and perfected their business operations over time. Thus outsourcing can give these companies a better competitive advantage over those that are either unable or unwilling to outsource their business support work streams.
Even within these small businesses, the benefits of outsourcing are clear. While these concerns can neither invest in infra or in-process skills to improve their procedures, they can outsource to companies who have already invested in establishing the infrastructure and processes and can provide this support on incremental cost basis.
How outsourcing helps SMES, large enterprises, and corporations
Since the invention of the assembly line by American automobile maker Henry Ford in 1913, the benefits of streamlined processes have been clearly demonstrable to all. Ford discovered that training a group of individuals to perform a specific set of tasks properly meant that they became efficient at those tasks, and with the efficiency became faster at them. He expanded this exercise to all of the tasks needed to build a car, and was then able to focus on other core commercial tasks. This allowed the business to enjoy bigger profits due to cost savings and increased production rate, as a result of this innovation.
With the technological advancements in today’s society, as well as the access to raw human capital in countries such as Nigeria, the same can be said for outsourcing today, although on a much larger scale. The factory represents an enterprise’s overarching business strategy and activities. Streamlining these business processes allows the company’s professionals to further build their expertise in their mainstream activities. By outsourcing some of these processes to specialists of the field, the companies can be assured of having access to the latest technology and processes in that domain without having to invest their own resources in it. While investments in some of these areas is viewed as a cost centre by the user companies, for the companies in the outsourcing space, this is the only source of revenue and hence the focus on quality and efficiency, leading to their continuous investment in technology, improved processes and skill sets.
How Nigerian companies can benefit from domestic outsourcing
Emerging markets have a number of common characteristics, namely access to a very large workforce, favourable investment conditions, a higher potential for cost savings and the ability to provide a new work force with specific skill sets which might have otherwise been inaccessible to them. There is also an assurance that the new workforce will be highly trained by those that are fully experienced in the very business operation that the user company might find unwieldy, troublesome, or cost inefficient to invest in.
Looking at the telecommunication industry for example, the best practice would be for these companies to outsource the customer care call centres and back office processes to companies that specialize in business process outsourcing, thus allowing them to concentrate on building their specialized skill sets, which can then be applied across different business units. Voice and non-voice-based customer call centres dealing with multiple media including web chat and social media platforms, IT management, fleet and personnel services, are just some of the areas through which businesses can see improvement by outsourcing to BPO companies.
Nigeria and Africa as a whole can be seen to represent the entrepreneurs of the world: most notably, the emerging markets and the SMEs in certain industries. The task of keeping up with the foreign markets is no longer an option, and is instead now a requirement for business survival. Streamlining business operations, apart from the cost benefits and the ability to make profit from economies of scale, will allow for increased gains by providing Nigerian companies with the chance to focus on building their industry expertise.
Valentine Chukwudebe
