Analyst: Non-strategic functions should be outsourced

Companies should adopt a 70 per cent outsourced business model to generate "agility" and wider access to external business knowledge, an industry executive has claimed.

"(Outsourcing) anything outside client consulting, business strategy, marketing and customer relationship functions allows the company to focus 100 per cent on (its) business strengths," said Zia Quereshi, managing director of Business Catalyst International.

Non-core activities like finance and accounting were inefficient, he said. "In-house people get caught up in day-to-day operations. It is not easy for them to do the job quickly," Quereshi said.

On the other hand, outsourcing crucial functions like sales, marketing and account management would prove detrimental to a company's reputation among customers, he said.

Quereshi said cost savings should not be regarded as the only benefit of shifting to an outsourced business model. "Stop thinking cost only. Outsourcing gives competitive advantage," he said.

Outsourcing would also bring improved economies of scale, efficiency, speed of service delivery and in-house "innovation" to companies, Quereshi said.

Quereshi predicted Australia's outsourcing industry would "take off" in the next 12 months, exporting packaged solutions to the Asian region. "We will lead via the IT area initially, then spread to other business areas like environmental programming and e-commerce."

"Boards are struggling to understand the e-business rationale," he said. "They'll realise outsourcing is the way to catch up to their competitors in the rapid, e-commerce economy."

Companies need to integrate outsourced relationships into their own organisational culture, he added. "You've got to run a seamless team. You can't take outsourced third parties as a separate entity . . . but as a business catalyst," Quereshi said.

Alienating outsourced relationships posed the risk of "us and them" issues forming, Quereshi said. This would confuse the marketplace's perception of a company's culture, forcing the customer to have "unrealistic expectations" of a business, he claimed.

Quereshi also added that he thought opportunities existed for new players in the market. While outsourcing opportunities in the Asia-Pacific were good, he said the region lacked service providers, owing to investment fears dating back to the Asian markets crisis.

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