ADVANTAGES FOR OUTSOURCING BUSINESS PROCESSES FOR YOUR DUBAI BUSINESS

This article was updated on June 12th, 2023

This article has been researched and written by Neil Wilson and the team at Creation Business Consultants and has not used AI in generating this article.

Outsourcing has been in use since the 1970s and gained popularity in the 1980s as more large-scale businesses began to outsource their operations. According to PWC, outsourcing has grown in popularity in the Middle East, notably in the GCC, and is expected to reach $2 billion by 2025. Outsourcing is becoming more important to organizations than ever before. Outsourcing particular responsibilities and tasks to provide products or services on time while earning a profit is an easy approach for firms to cut overheads, operational costs, employee headcount, and on-costs. We go over everything related to outsourcing. and how Creation Business Consultants can assist your Dubai business with outsourcing supporting roles.

WHAT IS MEANT BY OUTSOURCING?

Outsourcing is described as the process of contracting a third-party supplier or an external consultant to perform some of a company’s typical business functions. Businesses typically outsource in order to lower their costs. It may be ideal for professionals to perform part of the company functions, freeing up management time to focus on key business activities.

WHAT ARE THE ADVANTAGES OF OUTSOURCING?

Below are some of the main advantages of outsourcing services to a third-party service provider:

COST REDUCTION

The most obvious benefit to your Dubai business is cost reduction. Every business wants to reduce expenses and maximise profits. The primary reason businesses outsource is to decrease their overall fixed operating costs. Some of the main costs which can be saved by outsourcing are listed below:

• Office Space – If a company leases office space or a factory unit, outsourcing some of its functions will free up space, resulting in a rental cost savings. If a company owns the space, it can earn income by renting it out and generating a consistent stream of revenue, or it can produce cash flow by selling the office or manufacturing site. Companies will save money on office furnishings and leasehold renovations in addition to saving money on office space.
• Training Costs – Companies are recruiting trained individuals by using outsourced service providers. This allows a company to save money on training and time spent on training new personnel.
• Labour and visa fees – Companies in several Gulf Cooperation Council (GCC) countries, such as the United Arab Emirates (UAE) and Saudi Arabia, must invest in sponsoring each employee’s visa expense, as well as providing medical insurance, end-of-service perks, a gratuity, and a repatriation allowance. Outsourcing allows businesses to save money while also saving time and effort on visas, insurance, and end-of-service calculations.

TIP: In general, businesses can save money on office space and staff costs by outsourcing some of their company tasks. In addition to lowering expenses, it can assist businesses free up cash flow by lowering capital expenditure and streamlining cash flow.

IMPROVE BUSINESS EFFICIENCY

Outsourcing has the potential to increase overall corporate efficiency. Companies that have outsourced some of their business activities may be able to minimise their end-user production costs. As a result, businesses will get a competitive advantage over their competitors by offering a lower price to their customers in order to attract a larger client base or raise their profit margins.

TIP: Periodically check with any of your current suppliers or providers to see if it would benefit you to outsource certain tasks for your UAE business.

FASTER GROWTH

Outsourcing can help a new Dubai firm grow and expand faster in its early stages. When a company outsources essential services, management saves time and effort in employing new staff. As a result, businesses may swiftly add more trained workers, saving time on training new employees. If a project requires a large investment, organisations can utilise an outsourced provider and use their infrastructure to manufacture or as a distribution/ logistics hub.

TIP: Know the difference between when to work in your business or work on your business.

ACCESS TO SKILLED PERSONNEL

A common reason for a firm to choose an outsourced service provider is when it needs an expert or employee with a certain skill set. Some jobs that are delegated to professionals can be completed more swiftly and efficiently.

TIP: Make sure to hire experts for specific jobs. Completing your company’s registration, Economic Substance requirements, and compliance reporting are some examples. Can you afford not to accomplish a work correctly and on time? Failure to finish a task, such as the examples above, can result in hefty fines and be more expensive in the long term.

FOCUS

Most businesses that outsource conventional business services such as payroll, accounting, or other back-office operations or administration provide their staff more time to focus on and emphasise key business activities. An outsource provider will share the workload of current or internal personnel, resulting in greater or improved in-house efficiency.

TIP: Has a task taken you a long time to complete and does it involve administrative tasks that take up too much of your time? Know where to invest in outsourcing and focus on what you do best within your business.

ACCESS TO BETTER FACILITIES OR TECHNOLOGY

Outsourced suppliers are more likely to use cutting-edge technology and business support solutions. Using a third-party supplier to accomplish a work or portion of a task allows a company to gain access to superior business tools or to be viewed as competent and technically advanced. Because of the rapid changes in trends and technology, outsourcing may be more realistic for your company. Another significant advantage is that a company will not need to invest in specific technological instruments, such as new or updated software, and thus will save money.

TIP: Review the technology and business tools you are currently using within your business. Evaluate if it is better to not purchase e.g., a software license or invest in a certain business tool but instead outsource certain tasks to a service provider. As a result, the business will save time and money.

WHICH ACTIVITIES CAN BE OUTSOURCED?

Activities that are generally outsourced are as listed below:

• Professional services – This is a broad area that includes services like company formation, accounting, payroll, IT services, customer support, legal services, and so on.
• Manufacturing services – Certain multinational companies outsource manufacturing activities to nations with lower labour costs, such as India, the Philippines, Egypt, and China.
• Warehousing and logistic services – Smaller businesses who do not want to lock up their funds generally outsource warehousing and logistics services.

TAKEAWAY

Overall if you opt to outsource this should complement a business. Even whilst you are sleeping certain tasks can be done for your business. There are many benefits why outsourcing is one of the most effective business solutions. Delegation for certain roles and tasks will reduce business workload and let you focus on the essential areas of your business. For more information on how Creation can assist with outsourcing business services, contact Creation Business Consultants, email [email protected] or call +971 4 878 6240. We look forward to assisting your business needs.