Clients use outsourcing to fuel growth

A majority of businesses that implement a business process outsourcing (BPO) programme in order to achieve further expansion, will see sales and profits rise, while a significant number will also create more jobs within their organisations.

These are the findings of an independent research study^[1] by arvato UK & Ireland, which spoke to organisations that had previously identified growth and expansion as key reasons behind their decision to outsource.

The study found that 67% of businesses that had outsourced to drive growth have increased profits, 53% had seen their sustainable revenues grow, while 30% employed more people within their core activities.

Those BPO clients which saw profits rise achieved an average boost of 12% over the past year. With an 11% average growth in revenues, these companies significantly outperformed the wider UK economy during 2012 and early 2013. Those that had been able to employ more people increased their headcount by 11% on average.

Building on these results, a vast majority of the group (87%) said that they will continue to use BPO over the next two years to support their growth objectives.

When asked about the key to their success, 97% of the group said that a strong relationship with their BPO provider was crucial, while 83% believe that growth-related KPIs need to be embedded in the contract from the outset.

Growth in profits and revenues was achieved in part by winning new customer groups (33%) and entering new overseas markets (33%), as well as developing new products and services (33%). 30% of respondents have also profited from their outsourcing partnership by being able to increase overall skills levels within their business.

"The traditional view doesn't typically link outsourcing to economic growth. But business process outsourcing is becoming more important in clients' strategic decision making", says Matthias Mierisch, Chairman and CEO of arvato UK & Ireland. "As the economy continues to gather pace, clients look to outsourcing to help them seize new growth opportunities and stay ahead of the curve. For some this means gaining a competitive advantage through access to a partner's established infrastructure, expertise or geographic scale – and for others it's a case of ensuring business processes are running as efficiently as possible ahead of an expansion."

A study by Oxford Economics in 2011 found that the outsourcing sector contributed 8.5% to the UK's economic output, employing more than 10 per cent of the total workforce. Meanwhile, analyst NelsonHall this year stated that it expects the BPO industry to grow by 7% on average per year until 2016.

arvato says that these statistics, supported by the findings of its new research, provide a compelling case for outsourcing as the economy prepares for a new cycle of growth.

"We think it's important that there is a greater understanding of the wider benefits business outsourcing can bring an organisation, beyond cutting costs," Matthias continues. "If more outsourcing relationships were properly engineered for growth, then our research suggests that the net effect for the wider UK economy would be significant, with forward thinking clients creating jobs, developing more products and services, and targeting new export markets."

The research forms part of the second edition of arvato's Open Outsourcing reports, which aim to get to the heart of real-life outsourcing partnerships. This latest issue analyses how outsourcing can enable organisational growth, and includes advice from leading organisations such as Toshiba, Firebox and Chesterfield Borough Council, in addition to industry experts from Deloitte, Nelson Hall and the UK National Outsourcing Association.

To view or download a copy of Open Outsourcing: Enabling Growth visit: www.arvato.co.uk/openoutsourcing

^{[1] Coleman Parkes Research – research conducted with a panel of 30 senior BPO clients, on behalf of arvato, in May/June 2013}