In the call center space, the discrepancy in wages sticks out quite dramatically. A general rule of thumb is that in-house wages sit at roughly 2-2.5x the rate that outsourcing vendors charge. Therefore, if your organization pays in-house workers $30-$35 per hour, it is likely that an outsourcing vendor could provide resources to do the same work at $15 per hour.
These cost savings can also be realized when looking at bookkeeping and accounting services, another very commonly outsourced function. In-house bookkeepers average out to $74K per year, while an outsourced 3-person accounting team charges $48K per year. These cost savings can also be seen when your organization utilizes outsourced accountants on a monthly rate. This offers the added benefit of having the flexibility and control of short-term contracts, something that can further bolster the cost savings.
Software development is another example of a function with great opportunity in generating cost savings. The Philippines is a case in point; the average yearly wage for this type of work is $7,174 US dollars. Their American equivalents, on the other hand, earn on average $69,589 per year; in the UK, an equivalent of $41,551 USD; and in Australia, roughly $50,272 USD. A software engineer in the Philippines could be paid 80% less for doing the same job in the United States.
How Can Outsourcing Mitigate Risk?
Although outsourcing solves many internal problems, there are still risks in humans performing accounting and bookkeeping. Whether the work is completed in-house or by contractors, there is always a possibility of minutely incorrect figures leading to significant implications. Incorrect figures and calculations can lead to late or missed payments, duplicated expenses, late fees, and penalties. However, this risk can be remediated through an outsourcing company. These outsourcing services require very minimal input from humans and close to no manual data entry. Not only can these services reduce the risk and costs inherent to the business, but they can also cut down on the size of the in-house various internal operations teams.
What are the Additional Benefits of Outsourcing?
When considering opportunities to enhance value through outsourcing, there isn’t a one-size-fits-all solution. Cost reduction shouldn’t be the only factor when deciding on an outsourcing vendor. One of the key benefits of outsourcing is the flexibility to adapt to new organizational structures, technologies, or business focuses, something that is invaluable to a company looking to gain market share.
- Reduced training costs.
- Potential for reduced employee benefits costs due to fewer FTEs.
- Ability to add investment to a potential growth area or reduce investment towards a less promising segment of the market based on the market’s trajectory.
- Greater flexibility to pursue mergers or acquisitions.
- Flexibility to pivot and adopt the newest technologies when applicable.
- Improved performance and focus on primary responsibilities for FTEs.
- Less risk of human error compared to traditional contractors.
What Sia Partners Can Offer your Organization
Sia Partners can help you assess the outsourcing potential of your processes through ideation workshops and business case analysis. Leveraging our experience in outsourcing and our deep experience across finance organizations, Sia Partners can provide solutions that optimize costs through outsourcing. On top of that, we can provide you access to global labor pools, both nearshore and offshore, which can be scaled rapidly and efficiently to meet your organization’s needs. We offer flexible pricing packages to meet your resourcing needs no matter the scale and complexity of the outsourcing challenge. Finally, our ability to offer longer-term and ongoing services to your organization allow us to utilize our management consultants to conduct higher value added activities.
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