The US economy is strongly hit by inflation and is expected to go towards a recessional phase. According to the Bureau of Labor Statistics, inflation in May increased to 8.6%, the fastest increase since December 1981. While for consumers, it means rising prices and financial hardships, the situation is no less alarming for businesses.
Inflation continues to rise post-pandemic, fueled by supply-side shortages. Businesses must rethink their financial strategies for the coming year. Policy changes and other factors have further triggered labor shortages exacerbating the already dire situation and offering little hope.
However, the only silver lining in the prevailing inflationary business environment is the benefit of open borders (opportunity to avail offshore outsourcing services). When a business is struggling due to workforce shortage and high operational costs, OUTSOURCING can help. Outsourcing is a great way to beat inflation and prepare against recession. It allows businesses to lower administrative costs, access a more productive workforce, improve process efficiency, and grow.
What inflation means for your business?
Inflation has several implications for the business. Most significantly, inflationary times lead to fluctuation in demand for a business’s products and services. Often due to decreased availability of cash in the hands of clients during inflation and recession periods, demand can decline. The supply side challenges during inflation include increased costs of doing business. The prevalent labor shortage is further adding to the problem. Workforce challenges during inflation can cause firms to lose opportunities or meet delivery deadlines. Workforce shortage has alarming consequences for businesses, and inflation further adds to the loss of productivity. Employees who do not receive raises in their salaries to keep up with the inflation or suffer pay cuts due to cost-cutting during a recession experience lower levels of job satisfaction, motivation, productivity, and loyalty. All this can result in alarming consequences for business sustainability.
3 Ways OUTSOURCING Helps Combat Inflation
Outsourcing business services is an effective way to mitigate the challenges of workforce shortage and the high costs of running a business during inflation. It also helps to increase the efficiency of business processes and improve service delivery capacity. Getting an offshore team to handle time-consuming administrative functions allows a business to focus on the more critical tasks. There are several ways in which outsourcing can shield your company from the impact of inflation:
Reducing Overhead Costs
Outsourcing services is an inflation survival strategy that can strengthen the business in many ways. The most significant benefit of outsourcing to your company is the reduction of overhead costs. Giving away your business’s time-consuming administrative functions to an outsourcing service provider saves time and cost allowing you to focus on critical business functions.
Service-intensive businesses have to bear huge costs for in-house employees in addition to wages such as retirement benefits, paid time off, and insurance. There are also overhead costs associated with maintaining office space. Support functions such as accounts payable, finance and recruitment do not directly contribute to the company’s revenue generation but add to business costs. Outsourcing involves handing over the control of some of your business functions to outsourced service providers. Ensuring they are proficient in their service delivery and performing the business functions is vital.
Work with Experts
Outsourcing facilitates working with experts in every department. Hiring the industry’s top talent for every department can be expensive. But working with an outsourced partner with expertise and experience in specific fields allows you to work with the best. Your business can benefit from their expertise and experience in the industry, and outsourcing can improve your process efficiency hugely.
However, choosing your outsourcing partner carefully and enquiring about their team, skills, and experience before outsourcing your business functions is essential.
A great way to improve process efficiency is through outsourcing, especially during inflation. Companies that outsource operations to offshore service providers experience enhanced process efficiency due to streamlined processes. You can achieve automation across all departments and use advanced technology through outsourcing without investing in tools and training.
Cloud computing is used to streamline processes across various departments remotely with the help of automation, saving costs and time and improving output. Modern technology can be used to automate almost every non-core business function, such as digital mailrooms, virtual accounting, payroll management, timesheets etc. Outsourced providers have a skilled task force trained to work with various technologically advanced tools and automation to help your business survive inflation.
Outsourcing can be used during inflationary times to scale your team size and grow the workforce without investing in capital infrastructure. Outsourcing allows you to downsize or grow as per your business requirements without investing heavily in equipment and personnel.
With outsourcing, companies have the privilege to pay only for what they need. Depending on the business cycle and client requirements, a business can outsource tasks and only pay for those functions. On the other hand, employing a full-time in-house team of legal experts, accountants, bookkeepers, financial analysts, and marketers can be expensive. Outsourcing offers customization and flexibility, which protects businesses during a recession.
Focus on Core Business Tasks
Inflation is an economically challenging period, and business personnel need more time and effort to focus on the core business functions, which can be easily achieved through outsourcing. If a business has limited resources, it is advisable to outsource the non-core competencies and divert available resources for main functions.
Optimized Back Office
Back-office administrative, accounting, and payroll tasks are expensive to fully maintain in-house. These are essential business functions which consume substantial time and resources, and outsourcing them to experts is extremely beneficial.
Outsourcing service providers offer low-cost solutions to efficiently, accurately, and securely manage back-office functions. One of the first tasks a business can outsource is the administrative functions, especially if the business is looking for expansion during inflation. Outsourcing admin tasks to external service providers is also helpful for understaffed firms. Outsourced experts can get the work done more efficiently and at much less the cost of having an in-house team of skilled personnel.
Another important back-office function is recruitment. Outsourcing recruitment process allows a business to focus on the priority tasks and strengthen business during inflationary times. Back-office accounting and payroll tasks are crucial to the functioning of any business and regulatory compliance. However, these are time-consuming and require professional expertise. An in-house accounting team can increase business costs, and outsourcing is an optimum solution.
The Best Outsourcing Solutions for Your Business During Inflation
QX Global Group is an end-to-end outsourcing service provider which offers the best combination of people, processes, and platforms to transform your business operations. In an inflation-hit market, businesses struggle to survive and maintain profitability during a recession. Outsourcing with QX Global Group will greatly help your business sail through inflationary times and ensure business continuity.
QX outsourcing services offer a range of end-to-end solutions to manage front-office, mid-office, and back-office functions, including administrative, accounting, finance, and recruiting tasks.
A free consultation with us will help you understand how QX Recruitment Outsourcing Solutions can