Outsourcing Grow Among Mid-Tier Firms

On August 9, 2012, in Outsourcing, by Business Development Group
In most cases, mid-tier firms turn to outsourcing for the same reasons large firms do: cost reduction, offloading of non-strategic functions, the ability to focus on core competencies and access to improved technology.

In most cases, mid-tier firms turn to outsourcing for the same reasons large firms do: cost reduction, offloading of non-strategic functions, the ability to focus on core competencies and access to improved technology.

Information Services Group (ISG), leading technology insights, market intelligence and advisory services company, recently published research results showing “unprecedented growth in the use of outsourcing by mid-tier organizations”.

“Based on discussions with executives, we believe a significant number of mid-tier organizations will enter the sourcing market for the first time over the next 12 to 18 months,” said Deborah Card, Partner, Research Services, ISG. “To be successful, these clients will need to have an understanding of negotiating techniques and market conditions. The ability to assess offerings in the context of competitive industry dynamics will be especially critical.”

The Challenge for Mid-Tier Firms

Mid-tier firms face their own unique profitability and growth challenges as they struggle to compete beyond size in today’s cutthroat global economy. Mainly, they are limited by the lack of flexibility and scalability that larger firms have, making it difficult to control costs associated in maintaining and delivering high-quality services customers expect.

Related Articles: Competing Beyond Size: Outsourcing Boosts Mid-Size Trust Firms’ Scalability

In most cases, mid-tier firms turn to outsourcing for the same reasons large firms do: cost reduction, offloading of non-strategic functions, the ability to focus on core competencies and access to improved technology.  However, as newcomers to the outsourcing field, they run the risk of failing even at the early stages of outsourcing where objectives must be defined, an outsourcing service provider selected, and a mutually-beneficial outsourcing relationship built on the right foundations.

Related Articles:  The Outsourcing Solution

Points to Watch

On the upside, mid-tiers new to outsourcing can also benefit from the lessons learned in the industry. Some points to consider include the following:

  1. Understand the current business environment and determine the baseline of current costs and service quality as it relates to competitive strength.
  2. Forge an effective relationship with the right outsourcing service provider with well-defined terms and objectives that are clear and realistic.
  3. Foster innovation and continuous improvement by allowing flexibility and leeway for the outsourcing service provider to leverage their expertise to deliver a solution.

By implementing an outsourcing strategy, mid-sized firms are able to leverage an outsourcing service provider’s scalable technology platform to drive growth and profitability without the operational complexities and expenses associated of owning the resources themselves.

Related Article: Outsourcing Growth in Mid-Tier Raises Challenges, Opportunities

 

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