According to research, the Business Process Outsourcing industry is estimated to reach US$0.33 trillion this year. This includes a Compounded Annual Growth Rate (CAGR) of 6.69%, leading to a market volume of US$0.45 trillion by 2027. The year 2023 is expected to witness enhanced growth in the BPO sector.
Amid the growing buzz of outsourcing, many U.S. companies have opted to outsource their manufacturing process to eliminate costs associated with manufacturing operation facilities. Labour is one of the most significant business costs, and companies choose to outsource their operations to reduce these expenses. Outsourcing the manufacturing processes also helps firms reduce costs associated with infrastructure and equipment and provides numerous benefits.
ARDEM is a Business Process Outsourcing company that offers extensive services ranging from processing bills of material statements to large format conversion.
Why is Outsourcing Manufacturing Important?
Outsourcing manufacturing helps companies cut down on massive costs. The main factors firms consider while outsourcing manufacturing operations are listed below.
1. Labour Costs
Labour costs play a significant role when it comes to managing expenses for a company. These are the costs involved in maintaining a workforce or a dedicated department of employees to cater to manufacturing operations and management.
2. Overhead Costs
The overhead expenses comprise salaries, insurance coverage, utilities, maintenance, etc., to maintain the operations smoothly. The indirect labor costs associated with manufacturing units include equipment technicians, material handlers, quality control personnel, shipping and receiving personnel, etc.
3. Flexibility
Outsourcing companies give firms an extra layer of flexibility in times of excessive demand. Business process outsourcing companies have extensive resources in the form of labor, technology, skills and expertise, modern advancements, software, equipment, and much more.
Therefore, during peak times when the demand is high, firms can rely on outsourcing companies to scale up their operations and produce results on time. The firm no longer has to spend time and resources increasing its manufacturing operations and boosting its production capacity. The outsourcers can quickly respond to an increase in demand.
4. Focus
At times, manufacturing may not be central to the company’s focus or mission. In such cases, the companies can outsource their operations and focus on their core competencies. Suppose a firm realises it performs best in a particular product’s sales and marketing department. The firm can skip the production part and focus on sales and distribution to enhance its profits.
5. Efficiency
Outsourcing companies have the latest tools, resources and expertise to handle the manufacturing processes. If a business decides to conduct manufacturing operations internally, there is a high probability of the firm meeting inefficiencies along the way. Business process outsourcing companies ensure experts handle manufacturing and production processes to provide top-notch results.
ARDEM’s primary focus is to provide cost optimisation for its clients and streamline efficiency with increased accuracy. ARDEM also provides best-in-class back-office support solutions for its clients.
Conclusion
The demand for manufacturing outsourcing is expected to increase in the coming year. The primary reason firms outsource their manufacturing operations is to reduce the costs incurred in maintaining the manufacturing/production units.
In addition, outsourcing companies offer numerous benefits, such as catering to increased demands and providing flexibility and efficiency across all manufacturing operations. Many firms that do not consider manufacturing as their core competencies rely on BPOs to manage these processes so they can focus on their key areas and achieve greater profits.
ARDEM provides Business Process Outsourcing and Business Process Automation Services to established companies to help them improve operational Efficiency and Reduce Costs. For more information please reach out to us at pricing@ardem.com or call us at 908-359-2600.
