Next up for offshoring: SMEs

Small and mid-sized businesses (SMEs) are poised to take up outsourcing and offshoring in increasing numbers, according to industry group the National Outsourcing Association (NOA).

Sanj Prabhakar, SME director of the NOA, said in the past most SMEs haven't had the "internal expertise" to pursue outsourcing, especially to an offshore location. "I'm talking about having full time employees to manage such an operation."

Yet recently the pool of consultants with offshoring experience who are available to guide SMEs through the process has grown and the price model has come down in scale so smaller outsourcing deals can be accommodated, Prabhakar explained.

Suppliers are eager for business from SMEs too. "The supplier side is looking for new opportunities and that will filter through to... smaller companies," he said.

Small businesses are likely to get the same purported benefits from outsourcing as large ones, including low costs, competitive advantage and the ability to focus on the core business.

SMEs may also benefit from better service in supporting functions such as IT or accounting than they were able to provide doing the job in-house.

More importantly, Prabhakar pointed out: "Most SMEs are looking to expand... One barrier to expansion is access to good high-quality resources. Now they are getting it."

"Cost becomes secondary," he explained. "It's about getting resources to them that are available at a fraction of the cost."

Another effect of SMEs' rapid growth is that generally "reduction of jobs [as a result of offshoring] is less of a threat" than with large companies, he explained.

To help SMEs, the NOA is offering advice and research to members on best practices for outsourcing and offshoring. "We're seeing a lot of interest from new members wanting to follow best practice from start," he said.