5 ways managed service providers help with cost containment

ARTICLE | June 13, 2021

Authored by RSM US LLP

Every organization has unique factors that contribute to determining an optimal cost containment strategy. Managed service providers can help organizations make the best possible decisions related to cost optimization, as well as provide function-specific services on an outsourced or co-sourced basis to help your company better manage costs. When you work with a partner that has experience with your type of business and industry, it can provide guidance and services that strengthen your cost containment tactics in both the near and long term.

Are you curious about how your organization could better support cost containment and improve cost management? Here are five ways outsourcing can help with cost optimization.

1. Providing insight on the impact of cost-related decisions

Organizations that are seeking to manage costs often consider making big moves. This might include an organizational restructuring, supplier rationalization to streamline spending or sunsetting products or services.

Such major changes can have substantial effects on an organization, but they may not always play out as intended. However, time and resources often prohibit a company from examining all the potential ramifications of the changes being evaluated.

A managed service provider with proven experience evaluating cost-optimization or value-creating actions and strategies can provide a stress test to validate your big plans before your organization puts them in motion. Drawing on its wide expertise with similar clients and situations, the provider can also offer other suggestions for cost containment that you may not have considered.

2. Lowering high-cost turnover expenses for in-demand skills

Companies often outsource particular positions because individuals with the skillsets they need can be difficult to find or prohibitively expensive to hire in-house, or can quickly outgrow their roles and want career growth opportunities. For many organizations, finding and keeping skilled talent can be costly; however, they’re essential for mission-critical capabilities such as ensuring the reliability of core applications and protecting an organization’s users and data against the risks of cybercrime.

IT outsourcing can be the answer, especially in the area of cybersecurity, where there’s been a critical labor shortage both in the U.S. and internationally for more than a decade. An effective cost containment strategy could include managed IT services, managed application services, managed security and virtual CISO services. Because these are some of the most in-demand roles, the cost savings of outsourcing these services can be significant.

3. Improving process efficiency wherever needed

Identifying and acting on both granular and big-picture opportunities to trim time and costs in business processes can be challenging for organizations. Managed service providers with experience designing efficient systems that optimize how people, processes and technology work together can help companies recognize and take advantage of these opportunities. 

Choosing a managed service provider with industry- or function-specific expertise allows services to be targeted to your organization’s particular needs. For instance, processes that are largely manually driven, are frequently executed, or take a moderate degree of effort and touch more than one key system to complete are prime candidates for robotic process automation (RPA). Daily tasks like accounts payable and accounts receivable, for example, where there are numerous, time-consuming and repetitive manual activities that are easy to automate, would benefit from RPA. By automating these processes, RPA can deliver real value as well as significant time and cost savings. It can also free up staff to do higher level work like strategic initiatives, which might have more impact on company growth.

Often, organizational and financial inefficiencies result from a lack of business process integration. When a managed service provider helps with integration, it can streamline governance and workflows, delivering both cost and time savings for an organization.

4. Keeping business systems aligned and efficient during growth

Growth brings both opportunities and challenges for organizations. Whether a company is experiencing organic growth, going through an M&A or rapidly adding new employees, effective business process integration is essential to achieving cost containment and profitability goals. Business process integration also helps facilitate faster stand-up of new systems and applications, helping to deliver technology cost optimization.

Experienced managed service providers understand how to manage growth effectively, and they can apply best practices to help your organization scale quickly. For example, a provider with a wide portfolio of managed service offerings can help with managing through an M&A transaction management for an M&A, developing a business process integration plan, quickly standing up the newly integrated systems for that plan and then providing IT managed services and consulting over the life of your systems.

5. Enabling cost-effective agility for never-ending change

To be cost efficient in today’s globally and digitally linked economy, organizations need to adapt to change quickly and effectively. Such change could be driven by a wide range of factors, including customer behavior; economic, social or environmental events; or new standards and regulations. Whatever the cause and whenever change occurs, companies must be ready to respond.

Providers with industry-specific business experience and a large portfolio of services can support your agility by providing new or expanded services as needed. For example, the recent pandemic spurred a host of new requirements for workplace safety. In response, many companies turned to service providers to help them quickly build applications to communicate and execute the new safety rules. With the help of an always-on provider, organizations can spin up such digital solutions rapidly and cost effectively, enhancing their competitiveness.

The unexpected absence of a critical role, such as an IT leader, is another situation that requires organizational agility. Here, the problem could be solved by implementing managed IT services and/or hiring a virtual IT leader for a specific period of time. Such an approach can be much more cost effective than searching for a temporary replacement using internal resources.

Solutions for effective cost control

In today’s global business environment, controlling costs is essential to an organization’s success. Yet many organizations lack the in-house expertise and resources necessary to identify and execute effective cost-containment strategies. Outsourcing to an experienced managed service provider can help.

A strong managed service provider can optimize your process efficiency, keep business systems aligned during growth, share expert insights to guide cost-related decisions and enable organizational agility in the face of change. Choosing a provider that offers a subscription model with a predictable monthly fee further supports cost containment. The guidance, services and assistance that an experienced managed service provider offers can help companies of all sizes make smarter decisions to better manage costs. 

Seeking new ways to cut costs in your organization? Listen to our podcast to learn how outsourcing can optimize your back office.