Private Equity outsourcing trend is in full swing

Private equity firms are creating significant additional portfolio value by partnering with next-generation outsourcing companies that provide strategic guidance on a variety of operational improvements and transformational changes.

Next-generation outsourcing companies like Cloudstaff are able to bring extensive in-depth experience to the table. They are helping management teams to improve growth by giving them the flexibility to rapidly launch new services, improve competitiveness, and critically free up leadership time. This growth-oriented model helps drive potential and makes companies stronger and more agile.

Typically, when businesses look to grow and be more competitive in global markets, they focus on improving internal processes or consider a fresh business model. While these options are valid, they are not the only options available. Many businesses look at outsourcing as a way to optimise their competitive edge while reducing costs and growing revenue.

The shift is being fuelled by more complex tasks being supported by next-generation outsourcing companies. In an effort to differentiate their offerings, BPOs tend to go deep, specialising in specific back office competencies. They build to scale and support a broad range of services.

Advancements in technology, coupled with the general business community’s shift to “the cloud” is making the transition of back office functions, IT, customer support, accounting, marketing, and design services so much easier to outsource. Today’s BPOs are able to provide companies with tailored solutions that plug into enterprise applications such as Workday, Salesforce, Oracle, FIS, Temenos, NetSuite, SAP, Microsoft, Adobe, ServiceNow, Zoho, Zero Books, etc.

A significant advantage of the outsourcing model is it focuses the core business on innovation and growth. Keeping up with the speed of change is difficult for any business, even under optimal conditions. The cost benefits of outsourcing are enabling smart businesses to redirect much needed funds into innovation initiatives and other customer-facing revenue-generating ideas. It’s enabling businesses to be agile, to be better positioned to respond optimally to new market opportunities.

In short, next-generation outsourcing is a catalyst— an additional advantage. It’s a way to be first at what matters most and it’s a way to beat the competition.

The alternative to outsourcing is to not do it at all. This means accepting the burden that you have to do, support and build everything yourself. This traditional business thinking leaves businesses burdened with process and little room, time, or cash to innovate and respond to competition.

In today’s extremely competitive market, private equity firms have discovered that the businesses in their portfolios that have embraced outsourcing are more flexible, confident, and better positioned to capitalise on new international business opportunities. They are the ones able to leverage highly skilled offshore staff to quickly scale their business into overseas markets.

Outsourcing is being driven across all of the asset classes:

  • Mature companies with proven business models that need to expand, restructure their operations, or enter new markets
  • Start-ups and young companies where it is easier, cheaper, and less risky to enter new industries and develop new offerings
  • Distressed assets in need of more fundamental restructuring

As the benefits of outsourcing are becoming more evident, private equity firms are deepening their relationships with their trusted next-generation outsourcing partners. They’ve been quick to embrace the motto “if you don’t innovate, you die.”

It’s fair to conclude that outsourcing is fundamentally changing the way business is being conducted. It is an effective way for private equity firms to focus management teams on growth opportunities, reduce costs, and redistribute human capital to maximise business value. It’s giving management teams critical space to think strategically and transform their businesses.

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