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Outsourcing your Sales Department

Quick Notes - Oursourcing Sales:
  • Outsourcing Pros: Reduce salary expenses, maintain high net profits, quality for good and services from specialized companies, broaden organizational change, additional venture capital.
  • Outsourcing Cons: Language barriers, knowledge barriers.

Outsourcing is the way in which a business will divestiture part of their business in order to save money or resources. Typically, businesses outsource to save costs or take advantage of advantageous taxation in another part of the world. Companies experiencing financial shortcomings may view outsourcing as the first alternative to sufficing their operations. Unfortunately outsourcing has been met in recent years by very concerned customers and politicians. Jobs, income, and taxation decrease as companies leave developed countries to find cheaper alternatives in third world or developing nations. Is outsourcing your sales department the best option for your business? Have you considered the implications of outsourcing your operations? This article will dive into outsourcing and attempt to analyze it from a consumer’s perspective.

Advantages and Disadvanatges of Business Outsourcing

Why Outsource?

Assuming your operations are set in North America or any part of the developed world, you will understand that minimum wages and standard of living are much higher than those in other parts of the world. This theoretically means that workers in India or China can do the same job that North American workers do for much less pay. For a capitalist, this proves beneficial in reducing salary expenses and maintaining high net profits. However, there are plenty of other reasons why companies decide to outsource parts of their business.

Improved Quality of Goods or Services

Companies can improve the quality of their manufactured goods by finding a market that specializes in a particular process or system than what can be found in their home market. Companies can also improve their intellectual property by broadening their horizons and expanding into different markets. Perhaps the outsourced markets also have a particular expertise in a given facet of business that may assist in the overall effectiveness of operating their business.

Broader Organizational Change

A very popular reason for outsourcing is to use it as a catalyst for broader organizational change. Outsourcing is a common rally point for top level boards and committees that are looking to make a push into a new market or set new service standards for their clients. More simply, outsourcing may reduce the amount of time it takes for your products to reach the open market. Importing and exporting costs may be lower, and the time may effectively save you whole percentage points on your variable costs. Further, it may assist in mitigating your risk management. By diversifying your operations, you are giving yourself a larger pool to work from in an attempt to compensate for any domestic downturn in the economy or political world. And finally, outsourcing may be a gateway into acquiring additional venture capital from emerging governments that are eager to see reputable business in their countries.

Putting it into Context

Let’s take a step back for a moment and shift focus onto your business and sales department. All of the reasons to outsource sound like wise business decisions. Why aren’t all businesses doing it? Let’s explain the intricacies of outsourcing and what they mean for the typical business owner or sales manager.

Common Criticisms of Outsourcing

The single biggest criticism of outsourcing a sales or technical department is the language barrier. Often times your outsourced employees are in a developing nation where English is not the most spoken dialect. This poses a problem if your workers are going to be dealing directly with your customers and your customers expect a certain level of professionalism and understanding.

The next biggest criticism is embracing the knowledge barrier. Often times people in third world countries do not possess the education that we have the privilege of having, and so instead of using their knowledge to fix a problem or deal with your customers, they resort to using manuals and scripts that are predefined and written by domestic managers. This is a problem if your customer has issues outside of the standardized ones, or wishes to simply discuss issues with a company representative. Will your customers appreciate trying to overcome the language and knowledge barrier that may exist by outsourcing? The simple answer is no, and the long answer results in diminished sales. The cost savings by switching operations may be short lived, if your customer base discontinues their interest in your company.

The Reality for Small Businesses

Outsourcing is a fantastic opportunity to examine for large scale businesses with transcontinental operations, but it is anything but desirable for any small or midsized company. Keep your operations running on a basic or hybrid business model. Keep the business running in your domestic markets and ensure that you exhaust all other options before considering outsourcing your operations. Consider hiring a business consultant or sales manager to examine your shortcomings. Consider executing a secondary business plan and complimenting your operations accordingly. You want to ensure you’ve done all you can before you outsource. Expanding too quickly across borders can spell disaster for your budding business. Take the short term losses in order to maintain long-term sustainability domestically.
In closing, sales departments will find very little benefit from outsourcing to other continents or markets. Outsourcing is the last step in an effort to keep business afloat for small and medium sized businesses.