Outsourcing An Essential Tool In Today's Hyper-Competitive Online Marketing Environment
By Maurice Bretzfield
Outsourcing, in rapidly changing environments like today's e-commerce marketplace, is an effective and almost always-necessary tool that can help companies of all kinds out compete. The primary reason for this is simple: specialist experts in any field learn faster and acquire deeper knowledge than internal company departments ever can.
Firms of all kinds recognize the need to streamline by focusing on their core competencies and employing capital and resources in the most productive and efficient way. Outsourcing has become so popular mainly because of the inability of internal departments to deliver quality solutions. Companies of all kinds must focus their attention on those things that they do best and outsource non-core functions to firms that are the best at what they do.
At EComWorks, the Affiliate Managers focus on one core function - they specialize in one area and one area only-Affiliate Network Management. At Optimagicians, the experts there concentrate solely on Search Engine Optimization and placement maximization - nothing else. These individual specialist entities gather knowledge and create "learning environments" that most companies whose focus is product or service sales, can possibly hope to duplicate.
While today the term "outsourcing" engenders visions of workrooms full of workers in far-flung locations like India or The Philippines, most outsourcing is tasked to specialist expert firms in the United States . Outsourcing is about making internal business operations external. Businesses outsource specific functions to different specialist expert firms to streamline operations, enjoy improved performance of specific functions and, ideally, save money.
For these reasons, in today's hyper-competitive environment, outsourcing to specialist experts is essential.
Seventy-five percent of American and European multinational companies report that they use outsourcing and 29 percent are planning to use it more. These are huge firms who certainly have the resources to do these tasks themselves but outsource for many reasons. But outsourcing is an essential a part of business in the 21st century because importantly, it is a way of increasing quality, not just cutting costs.
Moving any business function, such as Affiliate Network Management or Search Engine Optimization and placement maximization, to another firm is like creating a new business that needs clearly defined performance goals and management that is capable of managing the relationship.
The companies that provide outsourcing services range from small operations to some of the nation's largest multi-nationals while outsourcing themselves.
Small business outsourcing is a growing trend, according to Jericho New York based The Outsourcing Institute (OI). In its fifth annual Outsourcing Index, OI reported that 60% of companies with fewer than 500 employees expected to spend between $1 million to $5 million on outsourcing annually. Another 20% of the companies queried have budgeted up to $1 million for outsourcing.
More than a market equalizer, outsourcing is a "key growth enabler for small to medium-size firms" because it offers economies of scale, which results in more predictable costs, shared or reduced risk, as well as access to expertise and infrastructure small businesses typically cannot afford or have no knowledge of.
The bottom line is that, provided they do the math, small business owners can enjoy a more efficient business by outsourcing tasks in order to concentrate on their core goals and objectives.
For small to medium enterprises the keys to success are to manage the details, establish a relationship with the right vendor or vendors, define your expectations, understand the fees that are involved, and, most importantly, clearly define the tasks that are to be outsourced.
Equally important is to choose outsourcing vendors who can deliver increased productivity and efficiency.
All business managers, at one time or another, have been stymied and frustrated by the inability to
Outsourcing can potentially save companies 10 to 15 percent of costs. The following formula can be used to determine if outsourcing is cost-justified:
annual salary +
commission +
bonuses +
benefits+
overhead+
any other internal cost /2,040 (the average number of working hours in a year).
If the costs associated with outsourcing exceed this total, outsourcing may not be an option for you as it may not be cost-effective.
Maurice Bretzfield, is the President and CEO of ecomTRAX® , EComWorks and Optimagicians each leaders in their respective online marketing segment. He is an online marketing expert who, since 1997, has built and managed Affiliate Networks for a prestigious group of clients including Sony Music, The Disney Store Online, Cooking.com, Home Shopping Networks' Improvements Catalog and many others. For further information about how you can benefit from ecomTRAX® Business Competitive Intelligence® , contact us today. Maurice_Bretzfield@GOMSource.com.
i PricewaterhouseCoopers' Management Barometer Survey