Why a Recession is Ideal for Outsourcing | Top 5 Industries to Benefit

Blog

Why A Recession is the Best Time for Outsourcing & Top 5 Industries to Benefit from It

Why a Recession is Ideal for Outsourcing | Top 5 Industries to Benefit

Blog

Why A Recession is the Best Time for Outsourcing & Top 5 Industries to Benefit from It

8 MIN READ / Sep 24, 2024

A major economic downturn, like a recession, causes management to make tough decisions, like layoffs, to reduce spending. This unforeseen situation can be an opportunity to grow by innovating to survive in the game. The stakes are high, so you better prepare your sword to fight with the unforeseen circumstances.

"A study by Deloitte, in its 2022 Global Outsourcing Survey, stated that 59% of companies leveraged outsourcing techniques during the recession in an attempt to reduce costs and increase efficiency."

In a constant effort to thrive in a recession period while you are already struggling with a low budget, making your customers happy is quite difficult. The strategic move for outsourcing is the perfect thing that you can do for your business to keep the production capabilities high and head towards satisfied customers.
This comprehensive blog will explain why outsourcing is the best option for cutting costs during the recession while staying focused on core business operations.

What is a Recession? Understand its Impact on Business

The National Bureau of Economic Research (NBER) defines a recession period as an extended period of economic decline that lasts beyond a few months in a country.

For example, the February 2020 coronavirus outbreak significantly disrupted economic activity, impacting many businesses and industries while decreasing the country's GDP. The economic downturn impacted multiple industries, decreasing loan availability and creating market imbalances.   

The impact of recession can be seen exclusively in small and large enterprises through a sharp decline in sales and profits. Consequently, organizations try to cut costs through layoffs and less capital spending, significantly enhancing unemployment rates. Further, a recession has an adverse effect on businesses by tightening their creditworthiness. Even big companies cannot recover from debts to sustain their operations, and a recession can cause bankruptcy.

Amid severity, there is an opportunity for growth because every change leads to transformation. With the recession at a high stake, there is a shift in consumer demands. This motivates you to build a sustainable business that survives unforeseen situations. Outsourcing some services or products can help businesses reduce overhead costs and shift focus to quality customer experience.

Explore the Benefits of Outsourcing to Pass Recession Period Smartly

Offshoring operations can be a successful plan for navigating economic storms like a recession. Here are a few core advantages of outsourcing that prove its investment's significance during a recession.

1. High Time to Focus on Service Quality

Outsourcing the operational aspect of business can help you improve service quality as new ways of doing things are introduced. The outsourcing service provider’s knowledge and experience will bring new procedures to the table, which later helps enhance service excellence. 

Major tech giants like Apple, IBM, and Network have leveraged the benefit of outsourcing as a strategic approach to climb the success ladder during tough periods.

2. Leveraging Adaptability of Business

Thriving in adverse situations is what makes your business resilient. Change is part of life, and you must adapt to change to sustain long-term success in the market. Outsourcing during a recession is an opportunity to try a new strategy and respond to market conditions cost-effectively.

Successful brands like Cisco have outsourced network management operations to attain service-level objectives, which helped the company ensure stability to a greater extent.

3. Ensuring Cost Effectiveness

Knowing your upfront cost is necessary, as it impacts your spending. During recessions, organizations often suffer from tight budget issues. Outsourcing services will be a viable option to get an edge in this situation through cost-effectiveness. It is not your fixed cost; it is a variable cost that can accelerate growth.

4. Improve Operational Effectiveness

Recessions bring production difficulties, demanding that your business improve operations cost-effectively. Outsourcing specific functions will allow businesses to streamline operations that do not require special care. Likewise, companies can focus on internal resources for smart judgment and enhanced output. While outsourcing, you can maximize the performance of your services through establishing result-oriented processes.

5. Get Expert Insights

With outsourcing, organizations get access to professionals with expertise in handling specific jobs. When you partner with the right outsource service provider, you can get expert suggestions from a trusted partner. The team can help you develop a new perspective for solving a problem and provide software that speeds up your operations. With years of experience, their skills add to the beneficial function of making your product truly compelling and unique.

Thriving through the recession can be tough, not when you have a plan in advance. Unlock the secrets of effective outsourcing so that you thrive and not only survive.

Tips to Outsource Effectively During a Recession

We know that the recession period involves tough management decisions. Outsourcing can be treated as a lifeline in this crisis, and it will only bring cost, quality, and service efficiencies.

Here are some useful tips that can fuel your strategy:

1. Define Your Goals

Before making a move, know your business goals to avoid misunderstandings with your partner, such as:

  • Reducing costs
  • Improving customer service quality  
  • Achieve operational excellence  
  • Improve customer satisfaction scores

These goals must be followed up with clear documentation specifying your expectations and scope of work.

2. Choosing a Credible Outsourcing Expert

You must opt for a reliable outsourcing professional with a proven track record of satisfying clients and relevant experience in the concerned industry.  

Here’s how you can differentiate and choose the best outsourcing service provider.

  • Review the Client testimonials and certifications  
  • Evaluate their technology infrastructure
  • Analyze expertise through staffing and processes
  • Look for Ethics and values for cultural fit
  • Communication style for collaboration and transparent interactions

3. Determining the Expenses Coming on the Way

After identifying the scope of work, you need to determine the expenses of outsourcing a partner. 

For that, you can identify -

  • The specific function involves bifurcating direct, indirect, and hidden costs
  • Calculate the cost of ownership for running the functions
  • Assess vendor fees and transition cost
  • Ongoing management costs
  • Compare the in-house expenses with outsourcing costs

After clearly understanding expenses, you will prepare a financial report supporting your decision to invest in the outsourcing service provider.

4. Keeping Measurement Criteria in Place

Your outsourcing project’s success will depend upon the partner's expertise and your expectations. So, you better make it right! You can consider the outsourcing provider's KPIs and SLAs, which help you monitor performance on mutually agreed standards. While you have clear expectations, it would be better to allow flexibility, especially when dealing with an unpredicted situation like a recession.

5.Focus on Communication

Communication is vital for project success. Consider the following points for addressing the potential challenges due to misunderstandings:

  • Establish clear communication channels like instant messaging, emails, phone calls, or video conferencing
  • Define your communication protocols and conduct regular meetings
  • Use collaborative tools
  • Leverage technology for real-time working  
  • Ensure transparency while sharing updates

Relationship is the Key: Building a strong relationship with your outsourcing service provider is essential to generating better outcomes. Show mutual respect and understanding to develop a lasting connection.

Learn How Top 5 Industries Are Embracing Recession by Outsourcing

Even though every other industry is adversely impacted by this economic downturn, some industries are embracing recession. Have a look at them -

Learn How Top 5 Industries Are Embracing Recession by Outsourcing

  1. Information Technology: The IT industry manages recession times by outsourcing operations like software development, technical support, network management, and infrastructure management. It would give access to external technical experts who can extend IT capabilities and push the organization to adopt the IT outsourcing model.
  2. Customer Support: Outsourcing call center operations is always a good decision to improve the quality of customer interactions. It is an affordable way to hire agents who can handle multiple calls simultaneously around the clock. It is a scalable model that allows organizations to accommodate fluctuating customer service demands.
  3. Marketing and Advertising: Organizations usually cut marketing budgets when facing a recession. Considering the current digital landscape, market presence is pertinent. Outsourcing your marketing function will give you access to specialists who can help you leverage brand visibility.
  4. Accounting and Finance: The business's financial health must be monitored closely. Reputable outsourcing partners can help you streamline major accounting functions like payroll, virtual bookkeeping, auditing, tax accounting, account administration, and so on to streamline workflow.
  5. E-commerce: Hiring an e-commerce outsourcing partner can help you grow your online store in no time. These people can handle major business functions like inventory management, marketing, and customer service. You can avoid unnecessary costs and boost the operational efficiency.

The Bottom Line!

A recession period brings ample challenges. But knowing the art of embracing hardships can help you become resilient, and that’s when you grow. Outsourcing the core business functions is the right course of action to obtain an edge by reducing costs and optimizing operations.

With a system-driven approach, FBSPL, a reputable BPO consulting company, can assist you in achieving the best results. We are dedicated to facilitating ground-breaking outcomes for our clients with the realization of their business perspective. Contact our experts and get the best outsourcing solutions you have been aiming for.

Share

Frequently Asked Questions

Leave a Comment

Recent Blog

Dotted Arrow

Talk to our experts

Need immediate assistance? Talk to us. Our team is ready to help. Fill out the form below to connect.

Blue Square Vector
© 2025 All Rights Reserved - Fusion Business Solutions (P) Limited