Like businesses in most industries today, telecoms are facing an unusually high level of uncertainty due to circumstances beyond their control. Credit and capital funding may be difficult to find for even well-managed companies with an established history of success, so the name of the game for the near future will be making only the most carefully calculated and targeted investments for growth and expansion. In a high-tech field where product and service innovation are key, the best (and possibly the only) strategy that makes sense right now is to structure your business organization so that it’s as “mean and lean” as it can be. One way to do this is to eliminate non-core operations in order to focus your energies and capital on those activities that contribute directly to revenue and growth.
Most businesses — and telecoms are no exception — include both revenue-generating and administrative support functions. Revenue generators include customer-facing staff like salespeople, the purchasing department, marketing, technical support and manufacturing. Administrative support is necessary to keep the company running, and to ensure accurate billing and other operating issues, but it also represents an expense rather than a source of income. In tough times, continued growth can depend on cutting internal operating costs, but with no reduction in efficiency or in delivering quality service to customers.
Outsourcing your billing and mailing operation is one way to achieve this. After all, your IT department is most effective when it’s free to concentrate on running and maintaining smooth services — not when it’s pressured to meet transactional printing deadlines and navigate the complexities of automated mail preparation. While outsourcing your invoicing and mailing functions to an outside service provider still represents an expenditure, it can prove to be much less than the costs associated with setting up a professional-level printing and mailing center in-house and finding the skilled employees to run it.
Why Outsource?
Following are five key reasons to use a business case for outsourcing your invoicing and mailing functions:
#1: Reduce and Control Operating Costs. This is the single most important strategic reason for outsourcing. Having access to the outside provider’s lower cost structure and advanced technology, which may be the result of greater economy of scale or some other advantage based on specialization, is clearly and simply one of the most compelling reasons for outsourcing.
Companies that try to do everything themselves may incur vastly higher research, development, marketing, production and employment expenses — expenses that ultimately have to be passed onto the customer. In a highly competitive marketplace, customers are too sophisticated to accept the costs associated with an organization’s attempts to maintain singular control over all its resources. They’ll just find a lower cost telecom service provider.
#2: Make Capital Funds Available. As stated above, outsourcing is a way to reduce the need to invest capital funds in non-core business functions. Instead of building and staffing your own in-plant printing and mailing operation, you can contract only the services you need on an “as-used” basis, thus making capital funds more available for core areas. Outsourcing also can improve certain financial measurements of the firm by eliminating the need to show a return on capital investments in non-core areas.
Deciding where to invest company funds internally is probably one of the most important decisions senior management makes. When a firm decides to outsource its statement, invoice or debtor letter printing, an in-house operation no longer competes for the company’s capital. Often, these types of investments — and their constantly escalating demands — have been difficult to justify when compared to areas more directly related to product development or serving the customer.
