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Datamonitor Report Reveals Outsourcing Benefits Rarely Understood
[September 07, 2006]

Datamonitor Report Reveals Outsourcing Benefits Rarely Understood


TMCnet Contributing Editor
 
Outsourcing is one of nearly every industry’s necessary evils. Companies looking to reduce overheads costs often look to outsourcing options as a means to fit their needs at better costs. Yet the full scope of outsourcing, from its weaknesses to its potential is rarely understood.


 
Independent market analysis firm, Datamonitor, has released The Future of Outsourcing, a report that examines what lessons from the past the new wave of outsourcing can learn from and what will drive its success going forward. 

 
Datamonitor’s latest report evaluates outsourcing in Automotive, Energy, Healthcare, technology and Financial Service markets. Highlighted points include: Sales force outsourcing as a common practice within the pharmaceutical industry; and sales force outsourcing used as a tactical maneuver by pharmaceutical companies, using the services provided by contract sales organizations (CSOs) to meet their short-term and long-term goals.
 
CSOs offer benefits to companies in that they can quickly build sales forces or provide additional sales representatives. This aspect is useful for pharmaceutical companies to adapt to sudden changes in their sales force needs. For the pharmaceutical company wishing to expand into new geographic or therapeutic areas, but lack the expertise, CSOs can fill the gap without requiring substantial capital outlay.
 
Datamonitor reported a slowing in the Western domestic contact center outsourcing while BestShoring has emerged as the latest strategy. Outsourcing is continuing to grow across all vertical markets, although in the wake of new business realities, western domestic contact center outsourcing is slowing. Offshore locations are continuing to provide high levels of customer service at a lower cost.  

Many US and Western Europe investors have adopted the nearshore model as a way of moving their operations to cheaper locations. In essence, these companies locate their facilities in relatively close proximity to the markets they serve.
 
In an effort to realize maximum profits from outsourcing, many companies are now using the BestShoring strategy – one that tailors specific customer care needs to locations that are best suited for these functions. As a result, the investor can save on the cost of domestically sourcing the work while also removing the inflexibility of using only one offshore location.
 
 
Once systems are fully in place and working effectively, a further round of cost savings can be realized beyond those efficiencies that naturally fall out of a process optimization implementation.
 
Outsourcing has been a viable option for many different industries for a number of years, although this term was not always synonymous with offshore outsourcing or simply offshoring. What has garnered so much negative attention the past few years has been the explosion of offshoring in numerous industries, particularly for the customer service center.
 
Outsourcing can offer the company significant benefits in many areas, but the entire picture must be examined and understood before a move toward outsourcing can take place. For instance, cost benefits may have been obvious from the onset, but customer loss or service degradation was not. This is not necessarily the norm in every outsourcing scenario, but it must be a consideration in order for the option to be viable.

Susan J. Campbell is a contributing editor for TMC and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page. 

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