How Firms In The Business Services Niche Are Succeeding, In Spite Of The Outsourcing Threat
When the outsourcing trend started catching on a few years ago, it was thought to be the trend that would bring an almost universal death to certain business services provider firms. That would especially be the case, it was thought, for the firms that were into provision of the sorts of services that could be conveniently off-shored. Back office operation service providers (such as accountancy, audit and data processing), it was said, would be the first casualties of this trend; followed by customer care firms and their ilk. The commentators holding these views just couldn’t bring themselves to see how a company, keen on minimizing costs, and maximizing profits, would pay a local firm 100% more for a service it could get at a tenth of that fee from an offshore service provider.
The outsourcing trend now seems to have reached its peak. And there is no denying that it has brought with it, the death of certain business services provider firms. Yet the whole thing doesn’t seem to have been as bad as it was feared. There are many business services provider firms that have not only survived in spite of the outsourcing trend, but actually apparently thrived because of it.
So the question before us is as to how such firms in the business services niche are succeeding, in spite of the major threat to their existence (let alone their success) which is the outsourcing trend.
As it turns out, there are three strategies that most of the business services provider firms that have managed to survive and actually succeed seem to have employed. These include:
1. Offering better services than the off-shore companies: as it has turned out, the off-shore companies to which most of these services are contracted don’t, exactly, understand the western way of doing business. That is how we end up with the heavily-accented customer care representatives you can’t really communicate with. So what the local business services provider firms have done is promise a better, localized, customer-friendly service, which the off-shore firms often can’t provide. The end result is that some local business services provider firms have managed to remain relevant, in spite of the outsourcing threat.
2. Cutting their costs: it has also happened that the outsourcing trend has come up at a point in time when numerous innovations (that businesses can exploit to cut costs dramatically) have been emerging by the day. Many of local business services provider firms, seeing the major pricing disadvantage they were at, took full advantage of these cost cutting measures. And that has enabled them to offer their services at prices that are, at least comparable (if not exactly equal) to those of their off-shore competitors.
3. Turning into outsourcing consultants: there are also some local business services provider firms that, unable to compete with the outsourcing proponents, have simply ‘joined them’ by converting themselves into outsourcing consultants. As it turns out, the outsourcing thing is not as easy as it first seems: there are challenges in finding off-shore firms to work with, and ensuring that the quality of work you get from them is decent. Sometimes, the average firm needs a ‘go-between’ to handle those complexities, and that is exactly what many hitherto business services provider firms have reinvented themselves into.
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