Outsourcing: Growing without losing agility

More and more companies are deciding to hire specialized service providers to carry out tasks that are not part of their core business. This practice is known as outsourcing and arises as a solution for companies to delegate processes to a third party to be more efficient, improve productivity, reduce costs and focus on their business without neglecting vital aspects of their activities.

“Outsourcing provides solutions to the company’s needs and adds value in activities that are not part of the company's core but are essential for the administration and management of the business,” says Sergio Verón, Lead Partner of Business Process Solutions (BPS) at Grant Thornton Argentina. “Through a professional and tailored service, specialized in the industry in which it operates, the company can obtain a competitive advantage that drives it to go beyond and allows it to innovate and scale quickly in the face of market changes.”

Outsourcing is used by both medium and large companies that want to focus their efforts on developing and executing their strategies, as well as by fast-growing startups that need to scale their operations without losing quality.

Types of outsourcing:

Any task that is not part of the company's core business is susceptible to being outsourced. We can broadly classify outsourcing based on:

• Purpose:
  • Tactical: It is the subcontracting to carry out complementary tasks to the main activity or a specific task in order to reduce costs and seek greater efficiency.
  • Strategic: Strategic functions are delegated to improve service quality.
• Activity they replace:
  • Business processes (BPO): Both front office and back office processes are delegated. Its main objective is cost reduction and efficiency improvement. Billing, collections, technical support, sales, customer service, taxes, and human capital management are the processes that are most outsourced.
  • Finance and accounting: The company outsources processes such as accounting, billing, accounts payable and accounts receivable. Also, the responsibility for preparing reports.
  • Human resources processes: May include personnel search and selection, on-boarding, payroll management, training or other activities related to people management.
  • Information Technology: The company hires another organization to manage its IT infrastructure, help desk, and software management (SaaS).
  • Production: Part of the production activity is outsourced. In many cases, this is due to a lack of resources or to the search for reductions in the budget aimed at renting facilities, investments and maintenance of equipment and machines, salaries of collaborators, etc.

Outsourcing vs Outstaffing

Outstaffing, unlike outsourcing, does not involve hiring a company to carry out certain tasks, but rather hiring external personnel with certain skills and knowledge through a company. Collaborators hired through this model (Loan staff), despite belonging to the provider's payroll, are managed by the contracting company and can be integrated into its teams.

This method of hiring relieves the company of the responsibilities associated with hiring personnel, since it is the provider who manages the settlement of salaries and taxes of the subcontracted collaborators.

“Outstaffing is a good option for those companies that have well-defined processes, well trained middle-managers who are capable of supervising the work and have the ability to manage larger teams,” highlights Verón.

Benefits of outsourcing

By outsourcing services, the company benefits through:

• Cost reduction: Hiring a specialized company reduces payroll expenses, investment in staff training and in equipment.
• Greater effectiveness: By delegating the performance of certain tasks or services to a third party, the company can focus on developing its business. By partnering with specialized firms, it can access technologies and working methodologies that favour the effectiveness of its processes and allow it to obtain better results.
• Greater specialization: Access to top-level specialists and experienced technical teams without the need to hire staff or allocate resources to ongoing training in areas that are not core to the business.
• Less risks: Outsourcing allows for a quick, timely and effective response to regulatory and market changes, reducing risks in legal, labour, tax or accounting matters.
• Access to better technologies: Firms that offer outsourcing services have access to technologies -such as financial accounting systems, ERP, invoice digitization, artificial intelligence and other cutting-edge tools- that can be difficult to access on their own. In addition, they have access to support and professionals trained and specialized in the use of these tools.
• Strengthening processes: Delegated tasks are performed by experienced resources. Also, the specialization and knowledge provided by the provider strengthens internal operations.

“In a changing and regulatory complex environment such as the Argentine market, outsourcing processes allow organizations to focus their efforts on the development and management of their core activities and exempt them from carrying out certain tasks without compromising the business or losing control of it,” adds Verón.

The election of an outsourcing service provider is key, as it will become an ally for the success of the business. Trust is an important factor, as is communication and establishing common quality criteria in the delivery of work.

At Grant Thornton Argentina we offer outsourcing services with solutions tailored to the needs of our clients. Our multidisciplinary teams have experience, and continue to train in accounting, taxes, administration and human resources. “Our focus on offering a quality service and going beyond business allows us to add value to our clients and assist them in their specific needs. Our teams become part of our client's success,” says Sergio Verón.

Learn more about how our Business Process Solutions services can help you

Visit our Business Process Solutions page