Outsourcing in the Midmarket: Reasons, challenges and best practices
In this piece, originally published by the National Outsourcing Association in the Outsourcing Yearbook 2016, Boris Kontsevoi discusses the reasons behind the growing number of midmarket companies who are beginning to outsource. He also points out their biggest challenges and differences with larger corporations. Finally, he presents best practices for midmarket players who are considering outsourcing some of their activities.
Outsourcing in the midmarket drastically differs from big companies and megadeals because of unique concerns of midmarket organisations. Here is why midmarket outsourcing is different and how midmarket organisations can assure their outsourcing success.
Midmarket vs big enterprises
Midmarket companies share one common characteristic: their main dilemma is providing the best product or service, while making realistic tradeoffs and negotiating budgets. The simple answer to why midmarket companies started to outsource is because they find it increasingly difficult to deliver enterprise level services relying solely on their in-house IT departments. In fact, over 70 per cent of midmarket executives find it hard for their IT departments to deliver enterprise-level services using purely their own resources. The midmarket cost and resource constraints are more stringent than big organisations. Although big enterprises have bigger budgets, midmarket companies are better poised to reap the benefits of outsourcing. Across the board, midmarket executives report better outsourcing effectiveness than big enterprises. In fact, about 20 per cent more midmarket than big executives report they were effective at reducing operating costs, gaining access to new talent, meeting regulatory requirements, and making their global operations more effective with outsourcing.
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