Study: More Than Half of LATAM Business Leaders Outsource Back-Office Work

With the corporate world increasingly focused on freeing up cash tied to business processing, two in five business leaders globally have already outsourced their back-office functions or are planning to do so, according to the latest Grant Thornton international business report (IBR).

The study notes that outsourcing is widely prevalent in Latin America, with more than 50% of business leaders outsourcing their back-office functions. Whether governments around the world approve or not, outsourcing is here to stay and will only become more prevalent in the years to come, the report predicts.

“Of course, the results also show there is room for further penetration in the market by engaging with the three-fifths of businesses which are not currently considering outsourcing,”  said Samantha George, head of outsourcing at Grant Thornton UK.

Corporate firms are realizing that outsourcing can help them save cost and inject efficiency into their operations by freeing up cash tied to back-office processes. Yet, there are some hurdles. Almost 44% of firms surveyed said they would not outsource because they fear that they might lose control of their key process.

However, George says that is just a popular misconception: “In fact, it (outsourcing) can help senior leaders at dynamic companies take a step back and gain a clearer picture of how the business is performing against its strategy.”

The high costs of implementation and the risk of contracting out services are also preventing many businesses from outsourcing.

The processes that businesses are most likely to outsource include tax (49%), IT (46%) and HR and payroll (36%). Outsourced solutions now exist for a considerable number of service lines, and providers have become expert at tailoring solutions to the individual needs of their clients.

In both North America and the EU, the number of businesses citing improving efficiency as the key driver of outsourcing rises to two-thirds. And of those businesses with no plans to outsource, a requirement to find cost savings (41%) or process efficiencies (33%) are the main reasons that would encourage them to consider it.

In the developing world, outsourcing seems to be all about accessing expertise, with 46% of BRIC businesses citing better access to expertise as a cause for their decision to outsource.