ADVANTAGES FOR OUTSOURCING BUSINESS PROCESSES FOR YOUR DUBAI BUSINESS

Outsourcing has been in practice since the 1970s and became popular in the 1980s once more large-scale companies started outsourcing their operations. As reported by Deloitte, outsourcing gained popularity in the Middle East, particularly in the Emirates of Dubai, and is projected to increase to $6.8 billion by 2023. Now more than ever outsourcing is gaining more relevance for businesses. An easy way for businesses to reduce overheads, decrease operating costs, reduce staff headcount and on-costs is to outsource certain roles and task to deliver their products or services on time whilst making a profit. We detail all things related to outsourcing and how Creation Business Consultants can assist your Dubai business with outsourcing supporting roles.

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WHAT IS MEANT BY OUTSOURCING?

Outsourcing is defined as the practice of hiring a third-party provider or an external consultant to perform some of the routine business activities of an organization. Outsourcing is generally undertaken by businesses to reduce their costs. It may be best for experts to handle some of the business functions which will free up management time to concentrate their efforts on the core business activities.

WHAT ARE THE ADVANTAGES OF OUTSOURCING?

Below are some of the main advantages of outsourcing services to a third-party service provider:

COST REDUCTION

The most obvious advantage is cost reduction to your Dubai business. Every company strives to control costs and obtain maximum cost benefits. The main reason companies opt for outsourcing is to reduce their overall fixed operating costs. Some of the main costs which can be saved by outsourcing are listed below:

Office Space – If a business is leasing an office space or factory unit, outsourcing some of its activities will free up space, thereby creating a saving in rental costs. If a business is owning the space, it could generate income by renting out the space and creating a steady stream of revenue or generate cash flow by selling the office or factory land. In addition to saving on office space, companies will have a reduced expenditure for office furniture and leasehold improvements.
Training Costs – By hiring outsourced service providers, companies are already hiring trained personnel. This enables a company to save on their training costs and saves time on training new employees.
Labour and visa fees – In some Gulf Cooperation Council (GCC) countries such as UAE and Saudi Arabia, companies must invest in sponsoring each employee’s visa cost, and provide medical insurance and end-of-service benefits, gratuity, and repatriation allowance. With outsourcing, companies not only save on costs but also save time and effort on obtaining visas, insurance, and end-of-service calculations.

TIP: Generally, companies can save on office space and employee costs by outsourcing some of their business functions. In addition to reducing costs, it can also help companies free up their cash flow by reducing their capital expenditure and helping them streamline their cash flow.

IMPROVE BUSINESS EFFICIENCY

Outsourcing can improve overall business efficiency. Companies which have outsourced some of their business activities may also be able to reduce their cost of production to the end user. Therefore, this will provide companies with a competitive edge over their rivals by offering a lower price to their customers to gain a wider customer base or increase their profit margins.

TIP: Periodically check with any of your current suppliers or providers to see if it would benefit you to outsource certain tasks for your UAE business.

FASTER GROWTH

In the initial stages of a new Dubai company, outsourcing can help a company grow and expand at a greater speed. When a business outsources basic functions, management has thereby saved time and effort in hiring employees. As a result, companies can quickly add more trained personnel, which will enable companies to save time on training new employees. If a project is capital intensive, companies can use an outsourced provider and utilise their infrastructure to manufacture or as a distribution/ logistics center.

TIP Know the difference between when to work in your business or work on your business.

ACCESS TO SKILLED PERSONNEL

A common reason for a company to decide on an outsourced service provider could be when it requires an expert or employee who possesses a specific skill set. Some tasks which are outsourced to experts can be carried out more quickly and efficiently.

TIP Ensure to enlist experts for certain tasks. An example is completing your company registration, Economic Substance requirements, and compliance reporting. Can you afford not to get a task completed correctly and lodged on time? Failure to complete a task such as the above examples can result in significant fines and prove to be more costly in the long run.

FOCUS

Most companies who outsource their routine business activities such as payroll, accounting, or other back-office operations or administration, provide employees within the organisation more time to focus and emphasise core business activities. An outsource provider will share the work of the existing or internal employees, which will lead to increased or improved in-house efficiency.

TIP Has a task taken you a long time to complete and does it involve administrative tasks that take up too much of your time? Know where to invest in outsourcing and focus on what you do best within your business.

ACCESS TO BETTER FACILITIES OR TECHNOLOGY

Outsourced providers tend to use the latest technology and business support tools. Utilising a third-party provider to complete a task or portion of a task permits a business to have access to better business tools or to be perceived as professional and technically advanced. Due to the frequent changes in trends and technology, outsourcing may be more practical for your business. Another big win is a business will not need to invest in certain technology tools e.g., new or updated software hence, the business will save money.

TIP Review the technology and business tools you are currently using within your business. Evaluate if it is better to not purchase e.g., a software license or invest in a certain business tool but instead outsource certain tasks to a service provider. As a result, the business will save time and money.

WHICH ACTIVITIES CAN BE OUTSOURCED?

Activities that are generally outsourced are as listed below:

Professional services – this is a broad category and encompasses services including company registration, accounting, payroll, IT services, customer service, legal services, etc.
Manufacturing services – some large companies outsource their manufacturing operations to countries having lower labour costs like India, Philippines, Egypt, and China.
Warehousing and logistic services – smaller companies who do not want to block their funds usually opt for outsourcing warehousing and logistic services.

TAKEAWAY

Overall if you opt to outsource this should complement a business. Even whilst you are sleeping certain tasks can be done for your business. There are many benefits why outsourcing is one of the most effective business solutions. Delegation for certain roles and tasks will reduce business workload and let you focus on the essential areas of your business. For more information on how Creation can assist with outsourcing business services, contact Creation Business Consultants, email info@creationbc.com or call +971 4 878 6240. We look forward to assisting your business needs.