The process of hiring an individual or a group of individuals to perform services that are usually done by in-house employees, also called “outsourcing”, has been a common practice for most companies today. After all, the outsourcing practice continues to boast multiple benefits, including lower operational and labor costs, as well as access to a talent pool that can be as large as it can be diverse.
While outsourcing can be done by any firm, it is a slightly different ball game for more aggressive markets and industries since these business sectors almost heavily rely on outsourcing as their primary cost-cutting measure. The consumer products and services industry, for instance, is considered to be at the tip of the distribution chain but surprisingly benefits more from outsource manufacturing to cover its costs.
What are other aggressive markets and industries that benefit the most from business outsourcing practices?
Digital Software and Tech Industry
There is absolutely no debate that the digital software and tech industries are booming and will continue to be aggressive in the coming years. However, this industry also depends heavily on the outsourcing process to cut costs — after all, app development and phone manufacturing often tends to be expensive when done in first-world countries by local developers.
One such tech company that utilizes outsourcing to an absolute maximum is major tech company Apple. All Apple products are currently being manufactured in China for good business reasons: (1) Chinese engineers can build smartphones faster due to extensive work hours and shifts; (2) manufacturing costs are significantly cheaper, and (3) Chinese engineers are, according to Apple executives, more skilled. In short, Apple looked at China because they can build iPhones cheaper and at a faster rate.
The Pharmaceuticals Industry
The pharmaceuticals industry will always be one of the most prominent business sectors anywhere in the world, as it is expected to be a $46.7 billion industry by 2026. This industry has to rely on outsourcing to keep prices affordable for its consumers, primarily through overseas products manufacturing.
Johnson & Johnson, the largest and most popular pharmaceutical firm in the United States, is firmly advocating the use of outsourcing in its business operations, stating that it is both a “business advantage and a benefit for consumers”.
Outsourcing in the pharmaceutical industry does not end with manufacturing, however. Most firms also utilize talent abroad for its research and development services that are usually very expensive when done locally. Contract research organizations, or CROs, provide adequate R&D support for firms at a fraction of the cost.
Retail and Consumer Products Industry
The retail and consumer products industry, as stated in the introductory paragraph of this article, is an aggressive industry that relies heavily on outsource manufacturing to cut costs and optimize profit margins.
One such company that takes advantage of outsourcing is Walmart. Its Great Value brand outsources primarily to China to manufacture its goods, all the while its local employees shift their focus on product quality and customer support.
After all, any product manufactured in the US can be manufactured in another country for a way cheaper cost.
Media and Entertainment (M&E) Industry
The media and entertainment (M&E) industry may be large and complex, as it involves different modes of media to present to its audience. There’s broadcasting, television, film, radio, and digital media, all of which are increasing in prominence. As this industry may be a behemoth on its own, it doesn’t necessarily mean that this business sector will not turn to outsourcing as a means to improve business.
The media and entertainment industry almost always relies on outsourcing for several services, including captioning and subtitling of films and series, video editing, and graphic design. Outsourcing can also be utilized in the media and entertainment industry’s marketing department, specifically market analysis, finance, and accounting.
In fact, the media and entertainment industry has blossomed with its use of outsourcing practices that the term “media process outsourcing” was eventually created. This form of outsourcing process has now reached 25 out of the 42 media firms in the Forbes Global 2000 Companies, making it a useful tool for an aggressive business sector.
Banking Industry
The banking industry continues to rise not only as a profitable sector of business, but a necessary part of any thriving economy. After all, banks devote themselves to assisting people with their financial needs and making sure that people make the right financial decisions.
So how do banks utilize outsourcing services as a means to maximize profit? Business process outsourcing (BPOs) for banks is usually covered by customer acquisition services, including documents approval and other customer support services.
A prominent bank that utilizes BPO services to its fullest is Citibank. This bank currently has offshore offices within India, Poland, and the Philippines, and has committed to investing $300 million for more outsourcing services.
You, too, can utilize outsourcing to achieve success in a highly competitive industry. It starts with engaging with outsourcing firms like AScaleX and getting access to a team of dedicated experts for marketing and lead generation.
Begin your journey with a discovery call with us!
There is absolutely no debate that the outsourcing practice continues to thrive in today’s modern business landscape. In fact, a 2016 Deloitte survey showed that major companies will keep outsourcing a huge chunk of their businesses primarily to cut unnecessary costs and subsequently focus on core business operations. Outsourcing may range from providing a full service marketing and web development to email marketing campaign services and customer support. Even to the most mundane administrative tasks that companies simply do not have time to do.
WhatsApp: A Closer Look at the Messaging App We Know Today
Right off the bat, we all know that WhatsApp is the most popular messaging application in the world. The now Facebook-owned company has more than 1.5 billion users from 180 different countries, making it one of the best success stories in digital programming.
WhatsApp was initially launched in 2009 by computer programmers Brian Acton and Jan Koum, who were both previously employed by Yahoo! Acton and Koum initially pitched in on the idea of a messaging tool that “showed a person’s status next to his/her photo”. The app constantly crashed at first and was experiencing a lot of bugs during its beta phase– to a point where Koum almost contemplated dropping the idea altogether and applying for a job instead. The duo chose to ride with the app for a while longer… in 2011, WhatsApp became one of the top 20 downloaded apps on the Apple App store, and in 2018 became the most downloaded messaging app ever.
This is certainly a validation that the concept of creating an efficient messaging tool would be the eureka moment for two simple app engineers.
Outsourcing and its Crucial Role on WhatsApp’s Huge Success in the Digital Industry
Creating a digital start-up may sound promising for most of us at first, but it undoubtedly presents a multitude of challenges. You need to determine what new solutions you can provide to the market’s current problems, and even then you would need to build your own reputation slowly. Before you know it, you’ve lost all your start-up money.
While Acton and Koum developed the initial idea for WhatsApp, they were well-aware of the staunch competition they were about to meet. For instance, Facebook was just beginning to emerge into the online scene with its own messaging tool, and Blackberry Messenger (BBM) was becoming increasingly prominent at the time.
Acton and Koum simply knew they had to focus their priorities in order to be the best. The duo gathered a small $250,000 seed fund from investors (actually their former co-workers at Yahoo who they persuaded to chip in) and had to keep costs at an absolute minimum. How did they do it? They outsourced the majority of WhatsApp’s development to a group of seasoned app developers in Russia, led by one Igor Solomennikov. This allowed WhatsApp employees in Mountainview, California to shift their focus on other tasks, including customer support and administrative responsibilities.
From our vantage point, it is immediately clear that the outsourcing practice became Acton and Koum’s secret ingredient to making WhatsApp launch its product efficiently. Not only was WhatsApp able to minimize its operating costs, it was also able to take advantage of great quality from its development team abroad.
With barely any start-up capital, this was really the only effective way to go for Acton and Koum to make sure that they succeed!
The Effect of Outsourcing on WhatsApp in the Long Run
Outsourcing services to other firms abroad present very obvious advantages (as previously elaborated in the above). Lower costs, better business management, and the potential for enhanced product quality. But what makes the WhatsApp story a particularly unique one is the fact that when they used outsourcing, it literally transformed the app from an idea to a digital juggernaut.
Acton and Koum were confident in outsourcing the app’s development in its launch phase but didn’t know just what type of beast they were handling at the time. In 2014, Acton and Koum sold WhatsApp to Facebook for $19 billion. That’s a pretty large jump from their $250,000 initial capital, right?
In Conclusion, How Can Outsourcing Be an Efficient Tool for a Company’s Success?
The WhatsApp success story has a simple, but inspiring takeaway for business entrepreneurs hoping to thrive in today’s digital age. It’s that outsourcing works when done the right way.
For one, Acton and Koum’s decision to hire Russian engineers to develop their app has been indeed an effective tool to break into the market and better cater to its needs. It has also been a technique to gain access to talent at a significantly lower cost.
AScaleX is determined to help you improve on the next best idea. Allow us to provide you with a dedicated marketing and lead generation team so you can focus on what’s important: growing your business. Who knows, maybe you can create the next WhatsApp?
If you’re up for it, let’s get on a discovery call!
