A logistics company needs to outsource its non core activities in order to increase the volume of its business & achieve dynamic growth. When done for the right reasons, outsourcing will actually help your company grow and save money. Out of the many business functions that can be outsourced, one is the IT function. Following are the top seven advantages of outsourcing your IT function -
1. Focus On Core Activities -
The core activity of a logistics company is to transport goods from one place to another. It handles all the activities related to this. IT helps the company to achieve this more efficiently. Managing the software requires manpower & skills. It is difficult for the logistics company to manage this as this is not their core activity. Thus, outsourcing this activity is a very good idea.
2. Cost & Efficiency Savings -
Outsourcing the IT function helps in reducing the high costs in managing the hardware, software & human resources for the same. Also, the software can be kept up to date by the firm responsible for making the software.
3. Reduced Overheads -
Overhead costs of performing particular IT functions are extremely high. Consider outsourcing those functions which can be moved easily. For example, upgrades of the software as per technological advancements can be done only by experienced IT professionals. If these professionals are employed it would lead to high overhead costs for the company.
4. Operational Control -
Operations whose costs are running out of control must be considered for outsourcing. An IT department that may have evolved over time into an uncontrolled and poorly managed division, is a prime motivator for outsourcing. In addition, outsourcing can bring better management skills to your company than what would otherwise be available.
5. Staffing Flexibility -
When an IT function is outsourced, the software development & testing is handled by the vendor. Thus, the human resources handling the most crucial functions are not a part of the logistics company. This allows the company the power not to be dependent on a section of people who are not handling the core activities. Thus, the logistics company does not have to work hard to please the developers & testers whose work is not core but crucial to the company's day to day functioning.
6. Enabling Continuity & Risk Management -
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company. For example, the logistics company is not left to fend for itself if its IT manager leaves the organization on short notice.
7. Development of Internal Staff -
A large project needs to be undertaken that requires skills that your staff does not possess. On-site outsourcing of the project will bring people with the skills you need into your company. Your people can work alongside them to acquire the new skill set. For example, the logistics company’s IT team can learn from the software functionality developed by the IT company who they have outsourced to.
Thus, outsourcing a complex function like IT is a wise decision for a logistics company. A logistics company should focus on its core functions like freight forwarding, warehousing, transportation etc. & not look to manage their software themselves. This will enable them to function more efficiently.
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