Multi-Office Businesses and How They Outsource Work to One of Their Offices

When most people hear the word "outsourcing," they usually think of a company which has transferred one or more of their business functions to an outside vendor. However, in some cases companies which have multiple offices and locations might already be engaging in a kind of outsourcing by transferring certain business functions to one or more of their other offices. As a result of this kind of consolidation of duties, companies are often able to cut costs, increase efficiencies, and better utilize their resources. When different locations or offices specialize in certain business functions, the other offices are free to maximize their office space and employees in pursuit of other core business functions. Although companies don't often think of this as "outsourcing," and instead tend to refer to this practice as creating "service centers," in reality it is a good illustration of how effective outsourcing could be for a company.

Corporate Service Centers versus Outsourcing

Even though a company may realize certain cost savings and increased efficiencies as a result of implementing service centers at their various office locations, they are still responsible for paying the salaries, benefits and training costs for these employees. In some cases, companies might be maintaining office locations solely for the purpose of providing space for these service center business functions. If a company were to outsource these business functions to an outside firm, such as using an accounting firm to handle their bookkeeping needs, they could realize even greater cost savings. Many times a company can reduce their office space needs, save on computer and equipment costs, and eliminate many of their recruiting and hiring costs, simply by outsourcing some of their business functions to an outside firm. Although companies are sometimes hesitant to utilize outside firms to handle their important business functions, it's not really a matter of "giving up control." Instead, it's simply a way of leveraging the experience and expertise of the well-trained employees who are employed by these specialized firms..

Transforming Cost Centers into Profit Centers

Every company has certain departments which function as cost centers instead of profit centers. Although these departments handle essential business functions for a company, they are actually an expense instead of being a money-maker. Examples of "cost center" departments often include accounting departments, human resources departments, and I.T. departments. Because these departments are often responsible for supporting the entire company, they are often ideal candidates to be made into service centers. Many times companies "outsource" the business functions performed by these departments to one of their other office locations, in order to free up space and resources at their primary locations for other business functions. However, if a company were to outsource one or more of these functions to an outside firm, they could use their other office locations for sales departments or call centers, effectively transforming a former cost center into a money-making profit center. In today's business environment, this could give a business the added advantage they need in order to compete more effectively in their market.