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How Outsourcing Improves Cash Flow

By Magellan Solutions

Updated on August 8, 2023

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Outsourcing is Not Only About Cost-cutting

The main reason why companies outsource call center services and back-office functions is to cut back on their overhead and operational costs. But is this worth the risks involved in this business activity?

When making a decision, some factors are worth consideration: cost versus quality, the reliability of the service, its return on investment, and its impact on your cash flow.


Domestic Solutions vs. Outsourced Jobs

Domestic solutions are more expensive than outsourced jobs from offshore locations. When considering the labor market rate per geographical location, the yearly salary of those working from Western countries costs more. Services in offshore areas are way cheaper.

Outsourcing hubs in Asian regions have a far lesser cost of living than in the US. By outsourcing, you can still compensate your staff members fairly but for much fewer dollars than the price you must pay when hiring in-house employees.

You can allocate more funds to your more profitable business activities like research and development with reduced spending. It may seem unlikely, but even startups and small businesses can benefit tremendously from outsourcing.


Endless Possibilities Brought by Outsourcing

Exponentially reducing your operational costs opens up new opportunities for company growth. Of course, it wouldn’t happen overnight. Making a single decision and taking a step towards it is only the beginning of achieving your goals for your business.

As you can save more with outsourcing, you can reinvest your critical business dollars into the company. You favor your business when you focus on essential growth elements (e.g., development, training, expansion). Let the experts in your non-core areas do the job for you. Aside from the savings, you will also gain the trust and loyalty of your customers — choosing to buy more from you instead of doing business with your competitors. 


The Impact of Overhead Expenses on Your Goals

Overhead costs are the recurring expense of running a business. The higher it is, the longer it will take you to achieve your goals. Sure, your business can get profitable, but isn’t it better if you don’t need to spend much of your profit on functions you can get for a lower price?

Cutting costs without sacrificing service quality is the best way to keep your profits rolling in. Outsourcing is a viable, cost-effective, and integrated solution that can bring about positive change. Choose a service provider who understands and can meet your goals and visions.


Increasing Retention Means Improving Cash Flow

Reliable BPO companies have years of experience to back them up in providing quality customer service. With experience comes knowledge and the ability to increase customer retention and loyalty: two of the most critical factors in increasing your profits and strengthening your cash flow.

Aside from their industry knowledge, outsourcing companies have stringent quality assurance programs. Dedicated project managers, skilled team leaders, and well-trained employees will also represent your brand for a quarter of the cost of domestic solutions.


Endless Workforce Boosts Cash Flow

Global outsourcing destinations, such as the Philippines, India, and China, are rich in talent. Since the competition in finding a job is stiff in these countries, the labor rate is lower than in Western countries.

With thousands of graduates yearly, looking for new employees is more accessible.

For instance, your company might be in immediate need of 1000 engineers. Instead of domestic hiring, you can quickly outsource these jobs to countries with a more significant population. Faster recruitment means lower expenses.


The Outcomes of Improving Cash Flow

What does improved cash flow mean to your business? For starters, healthy cash flow can mean a thriving business. Everything goes well according to plan.

Meanwhile, for experienced entrepreneurs, positive cash flow translates to better business expansion opportunities.

You can invest more in your research and development with a steadier income. This is to ensure the continuous improvement of your products and services. It allows you to provide what your market needs — enabling you to become one of their ‘go-to’ businesses when needs arise.

Improved cash flow also allows you to attract and hire better managers and team members. Recruiting and keeping top talents is not easy nowadays because of the tempting offers from other companies. It is a waste to have your competitors have them on board. So instead of letting that happen, why don’t you offer them first an attractive compensation package, perks, benefits, and opportunities for career growth? But again, this would be easier when you have funds. 

Remember, a solid workforce delivers better performance and speeds up the work cycle. You can achieve your goals faster, increase profits, and ensure steadier growth. It’s something worthy of investing in.

You can also use it to improve your infrastructure, buy quality tools and equipment, and invest in data that can significantly enhance the productivity of your business. Remember that if you want to get high returns, you should be willing to invest in the elements that can help you achieve it. 


Key Takeaway

Outsourcing makes a lot of sense to businesses — big or small — that want to focus more on improving their marketing efforts and increasing their sales while maintaining good customer relationships and streamlined back-office work.

Multinational companies do it, so why don’t you? Around the world, especially in offshore locations, many BPO companies offer outsourcing packages suitable for small businesses and startups. Even with the lower costs of services, you’ll be assured of getting quality service.

However, if you want to succeed in outsourcing, you need to choose a service provider wisely. Otherwise, your efforts and investments will only go down the drain.

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      How Outsourcing Improves Cash Flow

      Magellan Solutions

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