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Malaysian firms urged to accelerate outsourcing non-core business activities

KUALA LUMPUR: Malaysian companies should accelerate outsourcing their non-core business activities to lower their operational costs, obtain access to very specific expertise in a flexible manner and gain more flexibility to be more productive.

In an interview with Business Times, Quint Group senior consulting director (Asia) Edmund Wong said that local companies should consciously consider how to source their business processes externally to derive greater savings while increasing efficiencies.

“Sourcing business processes must start with a strategic business imperative. The most obvious one is to focus on core activities that give companies their a competitive edge,” he said.

“Therefore, for non-core activities that typically do not help a company in its competitiveness, the smart thing to do is to outsource these activities which may require management effort and continuous investment to keep them operating up to the market standard,” he added.

“Most companies organise their time, effort, capacity and knowledge around their core activities (earning matters) and mostly not around non-core activities as these can be considered as burning matters,” he further said.

“Outsourcing these activities allow refocusing efforts of management matters towards the company’s core and on new developments.”

Wong cited the case of global sportswear giant, Nike, which has focused on being the best in marketing and sourcing.

“Nike does not itself manufacture any product, even though one might argue that the manufacturing of its sportswear could be considered a core activity. Nike strives to be a top fashion brand and has developed a highly efficient and flexible sourcing mechanism that allows managing manufacturers and supply-chain

members to ensure highest quality standards, flexibility, cost containment and access to relevant technology,” he said.

Outsourcing has become a mainstay business strategy in today’s era of hyper competition with visionary companies outsourcing non-core services and putting all their focus on core strengths in their quest for sustainable value, added Wong.

So why put so much effort in activities that won’t help a company overcome its competition?

“The world, your customers and your competitors change rapidly and so should your business. Consider using business process outsourcing opportunities offered by the latest developments in the market, rather than maintaining a minimalistic focus on your current business model,” said Wong.

“Outsourcing can deliver value in terms of flexibility, knowledge and costs, but these goals need to be aligned with your business strategy. This is the time to set your priorities and determine your sourcing strategy, leverage market potential and stay successful in the coming years,” he added.

The Quint Group is a leading global independent consulting firm dedicated to resolving IT-related organisational challenges. The firm’s portfolio of services includes education, consulting and measurement, integrated across the domains of business and IT.

The International Association of Outsourcing Professionals has also recognised the Quint Group as the “World’s Best Outsourcing Advisors” for 2014.

Source: New Straits Times

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