Outsourcing isn’t a new thing. It has been around since the late 80s but only continues to be more prominent now as businesses find a more efficient way to thrive with the rise of labor costs in the global marketplace. The term “Outsourcing” refers to the process of having third-party service providers complete specific business functions. This function could be anything covering Accounting, IT, Customer Service, and many more!
Once upon a time, outsourcing was an option only for multinational corporations. However, many businesses of various sizes have now seen its key benefits, and have since tried it out!
What are the benefits a company can get from outsourcing its operations?
That’s a really good question!
Let’s just say it marries flexibility and efficiency, shall we? If you are a business owner who would like to spend more time doing whatever you are good at, or what you need to focus on, then it makes sense that you prioritize that. However, that doesn’t take away the fact that there are still numerous tasks that don’t play to your skills but still need to be done. With outsourcing, you can enjoy maximum efficiency because you’ll be left with tasks that are within your skill set while having equally competent people handle other tasks.
That sounds familiar. Isn’t that just like the typical business set-up where you have employees work on their tasks?
Yes, basically you have your “employees,” but the only difference here is that you have more flexibility. This is one of the major highlights of outsourcing because you get to turn a fixed cost into a variable cost. For instance, you don’t have to pay for a person’s full-time salary. Instead, you will only be adopting a pay-what-you-need service. When you outsource, you have greater flexibility and savings, which results in freeing up more cash and using it as an investment in other parts of the business.
Outsourcing is a good way to access top talent while maintaining your core team (full-time employees), reduce expenses and management load, as well as scale quickly!
With these kinds of benefits, it’s no doubt that the biggest companies are also utilizing outsourcing to the fullest! Here are some of the 10 world-popular brands that outsource their business operations. They have seen greater success and just might inspire you with your strategic decisions:
Nike
Everyone knows Nike – one of the world’s most extensive athletic footwear and apparel companies. It has over 73,000 people and currently has over 1,000 stores around the world.
In order to scale to its size now, it chose to outsource the manufacturing process to different contracted plants in Asia namely the Philippines, China, Vietnam, Indonesia, and Taiwan. This helped the company further increase its margins, reduce inventories, as well as price markdowns. Surely, Nike reaped the benefits of being an early adopter of outsourcing. In 2021, their revenue was recorded to be $3.6 billion, which is higher than $2.9 billion 5 years earlier.
It only makes sense for a super app to outsource its services, right? This app had a humble beginning because it had to keep development costs low from the onset. An iOS developer by the name of Igor Solomennikovwas contracted to develop its early version, and it took some time before the independent contractor was a full-time employee!
Apple
When it comes to technology, Apple definitely rings a bell. The California-based tech giant, and its genius founder Steve Jobs, is behind famous products such as iPhone, iPad, and many more. They couldn’t have become one of the most valuable companies in the U.S. with a market cap of over $2.75 trillion as of March 2022, if not for the strategic decision of outsourcing.
The company keeps all designing in-house, but it is known information that they outsource specific operations such as procurement, manufacturing, and software audit to different partners across the globe.
Yes, even this social website that focuses on employment has thrived because of outsourcing. Millions of people use this app, so the company decided to leverage on outsourcing customer support to partners abroad. This (along with Microsoft’s acquisition of the platform), led to its exponential growth and has over 800 million users worldwide today.
Pfizer
Staying on top of the global market is an ever-present challenged faced by the biggest companies. One of the most trusted brands in the biopharmaceutical industry is Pfizer, and it has also positioned itself as a vital player in the global vaccination drive against COVID-19. Pfizer has seen global success by outsourcing some business aspects beyond its expertise such as data management and sales. On top of that, they also had to outsource research and development.
One of the top businesses across the globe is the social networking site called Facebook. There’s only a little chance that you don’t know about this brand because almost everyone uses this. This platform outsourced customer support, content moderation, and even IT services since 2016 to various countries including the Philippines.
With this strategic move, they are able to focus more on the programming services of the business and acquire other platforms.
This huge American technology company is focused on search engine technology, online advertising, and computer software, among others. Back then, it was just the top search engine, but it has propelled itself to new heights and successfully expanded into various ventures. One of the things that contributed to its success is outsourcing.
In fact, the Manila office is one of the primary drivers of its success in the Asia-Pacific region.
Walmart
How does this company continue to offer low prices for its products? Well, you guessed it right. They rely on manufacturing plants in China to make most of their products.
Not only that, but they have also decided to outsource other operations, such as finance and accounting to a New York-based company!
Procter & Gamble
One of the leading multinational consumer goods companies apparently outsources many parts of its operations. No surprise there! Procter and Gamble decided for their core team to focus on innovation and synergy, and leave other tasks related to sales and facilities management to their partners. This led to the company’s success despite the pandemic, even getting a jump from the $71 billion in 2020 to $76 billion in 2021.
Coca Cola
This popular beverage company outsources the bottling of its products around the globe through outsourcing. In fact, they have over 200 partners around the world to handle this task. This includes Philippines-based bottling and distribution partner, which also has 19 brands manufactured in 19 plants and distributed nationwide.