Leading large-scale manufacturing and service-oriented corporations have been stressing scaling down costs and outsourcing low revenue business-generating units to offshore countries. This is the latest strategy adopted as part of the global competition, curbing cost and outsourcing little revenue business units, such as customer service centers, software, and design development, and assembling of electronics and consumer appliances. World-renowned corporations have adopted outsourcing approaches, such as stitching, labeling, packing, and finishing. Such businesses include Zaraman, Inditex, Ralph Lauren, and other leading stitched apparel.
Now the question, which comes to mind is how outsourcing jobs or outsourcing business processing operational units can generate revenue in offshore countries as opposed to being an internal division of the organization. The answer is simple, ever since the Activity Based Costing (ABC) has been introduced; many large-scale and world-renowned corporations started to demarcate Cost Business Units and Revenue Business Unit. These units are like financial division, production division, customer relationship department, human resource department, customer service department, printing department, in-house software development, and advertising department. For example, Apple has outsourced the assembly, packing, and printing of its consumer items like iPhone, Ipad, and iMac to China. If someone from the Middle East, Far East Asia, South East Asia, and Oceania wants to purchase any of the Apple Products online, when the package arrives, the backside of the product will clearly state, “Made and Assembled in China.” This is because the cost of production and labor is substantially lower in China. In the end, when cost and revenue are collated, and the bottom line is derived. This primarily affects the EPS (Earning per Share) and the value of share price on the stock exchange. This is imperative, as these corporations are public-quoted and listed on the stock exchange. If there is any financial misrepresentation or negative trend in the income statement, it is bound to impact the share price, investor’s confidence, and overall share value of the company.
Therefore, if the business corporation outsources those units of the operations that are not generating substantial revenue, it can be a very profitable proposition. The monetary advantages can be brought to fruition in the least amount of time and provide you the leverage to concentrate more on producing sales and effective customer service, thus being evaluated efficiently.
The scope of outsourcing is broad. Entities are providing both inbound and outbound customer services through IP telephones, accounting and bookkeeping services, CAD drafting services, photography, advertisements, marketing services, and other areas to bear in mind when considering how one can amplify revenue stream.
At this juncture, it would not be an incorrect statement to say that, nowadays, those units are usually being outsourced, which are generally labeled as after-sales service. In real-life scenarios, we come across situations where a lot of managers and executives spend a substantial amount of precious time dealing with after-sales service. This is frustrating for any management executive. When the person is finally able to make a sale or close a deal with the anticipation that the performance appraisal will bear fruits, the same person finds a glut of messages and issues related to after-sales. Therefore, the business unit of customer service is of paramount importance. Since they consume a lot of time, consequently, such groups are outsourced to professional call centers and customer service organizations to retain the customers. On the other hand, the in-house or internal management executives can focus on bringing in more revenue by acquiring new customers.
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