It’s an irrefutable fact that outsourcing has been a popular business strategy for many companies for decades. Business process outsourcing (BPO), in particular, has become a prevalent practice among companies, ranging from small all the way to the Fortune 500, looking to cut costs and increase efficiency.
Previously outsourcing was only viable for bigger companies that could afford large deals, with the advent of smaller, more bespoke BPOs, more companies can avail of the same benefits as larger ones. However, the impact of outsourcing on sustainability is often overlooked. Getting a better idea of the relationship between outsourcing and sustainability in outsourcing, and deciding whether or not it’s a good option for your company.
What Is Outsourcing?
At its core outsourcing is the practice of hiring an outside company to perform services or create products that would otherwise be done in-house. Outsourcing can be done domestically or internationally, and it can include a range of services, from manufacturing to customer service to administrative tasks.
While outsourcing can provide both time and cost savings for businesses, it can also have negative consequences for employees and communities. In some cases, companies outsource to countries with lax labor laws, resulting in poor working conditions and low wages for workers. This can lead to the exploitation of workers and damage to local communities. However, take note that over the years, the levels of exploitation have gone down while the benefits to the outsourcing country have increased.
The Advantages Of Outsourcing
Despite the negative consequences of outsourcing, there are also several advantages to outsourcing that make it an attractive option for businesses. The advantage that usually comes to the minds of people when discussing outsourcing is cost savings. Outsourcing can be cheaper than hiring and training employees in-house, especially in countries with lower labor costs. In addition, differences in currency rates means that some countries would benefit more than others.
Outsourcing allows companies to focus on their core competencies while leaving other tasks to specialized outsourcing providers. This can lead to increased efficiency and productivity for the company. Take for example a sales department, sales agents can get bogged down by having to come up with their own leads, outsourcing lead generation to another company or hiring remote staff through a business process outsourcing (BPO) center would allow them to focus on closing deals as opposed to generating lead lists, which in turn would allow the business to generate more capital for growth.
The Disadvantages Of Outsourcing
While outsourcing can provide cost savings and increased efficiency, it can also have negative consequences for employees, communities, and the environment. For example, outsourcing can result in job losses in the home country, as companies move jobs overseas to take advantage of lower labor costs. However, there are jobs that are often difficult to source locally, while outsourcing companies are better able to look for more qualified and readily available candidates.
In addition, outsourcing can have negative impacts on the environment, as companies may choose to outsource to countries with weaker environmental regulations. This can lead to pollution and other environmental issues.
Sustainability In Business Process Outsourcing
Sustainability has become an increasingly important issue for businesses in recent years. Companies are under pressure to reduce their carbon footprint and operate in an environmentally responsible manner. In recent years, BPOs are playing an important role in helping companies achieve sustainability goals.
One way that outsourcing can contribute to sustainability is through the use of technology. Many outsourcing providers use technology to reduce the amount of paper and other resources needed to perform tasks. This can lead to cost savings for the company and a reduction in waste.
Another point to outsourcing for sustainability can be seen when a country with a much higher carbon footprint outsources to a country with a smaller one. This would help to reduce emissions as the smaller country wouldn’t produce as much, especially if manufacturing isn’t involved.
One of the more forgotten benefits of BPOs that are linked with sustainability is the creation of jobs. Jobs bring in more wealth to a nation and in the case of poorer nations, the added revenue can help the country develop and move towards a more sustainable one.
The Importance Of Responsible Outsourcing
Responsible outsourcing is essential to ensure that the benefits of outsourcing are maximized while minimizing the negative impacts on employees, communities, and the environment. Companies can ensure responsible outsourcing by choosing outsourcing providers that adhere to ethical and sustainability standards.
In addition, companies can work with outsourcing providers to develop sustainability strategies that align with the company’s values and goals. This can include measures to reduce energy use, reduce waste, and improve working conditions for employees. With all the companies shifting their focus to corporate social responsibility (CSR), many BPOs already have sustainability processes in place, just make sure to ask when you contact one.
The Wrap Up
Outsourcing has become a popular business strategy for many companies, but its impact on sustainability is often overlooked. While outsourcing can provide cost savings and increased efficiency, it can also have negative consequences for employees and to local communities. Business process outsourcing can play a role in helping companies achieve sustainability goals, but it is essential to ensure responsible outsourcing practices are in place to maximize the benefits while minimizing the negative impacts.