Global Outsourcing Risks & Rewards

In 2007, Standard & Poor's reports that companies spent some US$150 billion on international outsourcing. Market research firm IDC sees that amount rising 65% to $250 billion by 2012.

Technology-based outsourcing is one of the fastest growing trends in international trade. However, operational outsourcing involves tradeoffs between client cost-savings and loss of control on the outsourced activities or functions.

Types of Outsourcing Service Providers

Some outside vendors take over major assets and resources including employees from a client company. These business process outsourcers assume full responsibility for one or more specific business processes that the client would otherwise perform.

The scope of this analysis is restricted to application service outsourcers who provide specialized functions for multiple clients.

Broadridge Financial Solutions

For example, Broadridge Financial Solutions is a full-service outsourcer that provides technological services for global financial services companies including banks and brokerage firms. Seven of the top ten broker-dealers in the United States outsource parts of their securities processing functions to Broadridge.

With over 45 years of experience and more than 4,200 employees world-wide, a specialized third-party outsourcer like Broadridge has a proven track record managing back-office processes for financial institutions around the globe.

Advantages of International Outsourcing

An international outsourcing firm can save the high maintenance costs and the specialized attention demanded by back-office operations like electronic securities transaction processing. Freed from the ongoing burden of daily back-office tasks, clients are able to focus on core competencies such as sales and new business underwriting.

According to third-party systems provider Cyber Futuristics, companies that outsource non-core operations also enjoy the following advantages.

• Outsourcing specialists have the technological resources, expertise and mandate to invest in new technologies that would otherwise be much more costly and risky for a client company to continuously manage on its own.
• By outsourcing to a team of technology experts, client companies access skills and training expertise not internally available while saving on human resource costs. The latter ranges from recruitment, training and performance incentives to employee group benefits.
• Ideally, highly skilled outsourcers increase their client company's productivity while lowering costs.

Source : Suite101