Small to medium businesses have limited financial and operational resources. They need to focus their budget on profit yielding investments and direct efforts toward business growth. Most of the time, it is a challenge operationally to manage in-house staff for additional but equally integral tasks such as customer support, IT, and accounting. Outsourcing is a cost-effective way for SMBs to execute these integral functions without overspending.
A report on small businesses states that one-third of these budding enterprises outsourced their processes in 2018. The total value of the global outsourcing market reached up to $85.6 billion in 2018. Thirty-seven of those that outsourced were small businesses. They hired a third-party provider to execute tasks such as IT services, accounting, and digital marketing. With more and more companies utilizing outsourcing, what trends do they need to look at in the coming year to help them make the most out of this service? Here are five important trends that will dominate 2020.
1. Robotic Process Automation (RPA)
According to more than half of the National Outsourcing Association survey on the future of outsourcing, robotic process automation will significantly improve outsourcing tasks. RPA can perform repetitive tasks that follow a hard set of rules. It can apply to business processes and IT support. RPA removes the burden of time-consuming back-office functions to human employees, freeing up their schedule to do more specialized activities that require analysis. RPA also lessens the total labor cost but still employs the human intelligence required to gain the insight needed to move your business forward.
2. The Experience Economy
Economic value isn’t limited to number-based results. The experience economy’s primary value is in non-material aspects that enable new ways for market opportunities and other service innovations. Based on this trend, outsourcing companies will expand their services to culture, design, and storytelling for marketing or advertising campaigns. Third-party services will no longer be limited to the standard accounting, IT, and research processes, and will focus on giving clients value for the experience-based services rendered.
3. Specialized Outsourcing Services
Outsourcing will also expand to other services that utilize advanced technology among different markets. This will provide more businesses the opportunity to add more outsourced tasks and processes to run their business. The specialization will benefit companies that have data gathering and information as their main assets, allowing them to tap more third-party providers that are experts and have the necessary technology to analyze, store, and process data efficiently.
4. Outcome Focused Cooperation for the IT Sector
The next year will see the focus from both parties—client and provider—toward outcomes, specifically results that share in the mutual investments of both parties. In the next year, companies will shift their focus on partnerships that have mutual investments. In this sense, costs will be reduced such that IT results are more aligned with the company's business goals and best practices.
Outsourcing companies will have to improve and innovate their relationship management to ensure cooperative collaboration with clients. In turn, clients will need to focus on the outcomes of this relationship and nurture the established partnership.
5. Cloud Outsourcing
Files are no longer limited to our gadgets. Data can now be uploaded to a cloud as a more stable and accessible alternative. A Forbes article reported that 85% of business workloads will be on the cloud by 2020. Outsourcing comes in to gather the files from different platforms and transfer them to the cloud. The third-party company will maintain and protect the data on the cloud.
Other services that will be outsourced in the next year: oil costs, transport, raw materials, and other means or processes that will minimize the operational costs of companies. Outsourced low-end services will also stabilize as more high-end business functions will be the responsibility of providers in the future.
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