Outsourcing Benefits

The motivation to outsource data entry operations is fueled primarily by cost. Domestic service bureaus can offer low cost data entry services by taking advantage of economies of scale, inexpensive labor, and image-enabled, document processing technology that automates data entry and document indexing.

1. Reduced Capital Costs :
Outsourcing offers two types of savings:
Capital Expenditures - Companies can save 100 percent of their intended capital expenditure (land, facilities, hardware, etc.) by working with an outsourcing firm. If the company’s workload increases, outsourcing obviates the need to invest in additional capital or ramp up capacity. Similarly, a company may find that the service bureau’s capacity offers a competitive advantage, particularly when operating in a price-sensitive market. If facilities already exist, they can be sold or used for other purposes.
Revenue Expenditures - Organizations can save 50 percent or more over manual data entry, plus operational and administrative expenses.

2. Converting Fixed Costs to Variable
Most service bureaus operate on a ‘per item of work’ basis, which means that by outsourcing, a company can eliminate key operator salaries that represent the major fixed cost of data entry. The practice of paying only when the work is done has a major impact on the bottom line, especially when income levels or volumes are down.

3. Savings on Healthcare and Legal Costs
Other incentives to outsource data entry do not involve labor savings, but instead entail savings on legal and medical costs. These include complications due to repetitive strain injuries (RSI), which are especially common among the population of users who have little or no training in typing. Emil F. Pascarelli, in Repetitive Strain Injury: A Computer User's Guide, reports that the number of RSI incidents has increased dramatically since the first PC was released in 1981, when only 18% of all illnesses reported were RSIs. In 2000, an estimated 70% of all occupational illnesses reported to OSHA were RSIs. Such injuries cost companies $20 billion a year in legal and medical costs.

4. Cost-Effective Solution to Seasonal or One-Time Work: It is not unusual for catalog retailers, tax processors and subscription houses to experience peak loads of 80 percent over normal volumes. By outsourcing, companies don’t have to maintain peak level staffing throughout the year. Outsourcing also allows companies to augment the skills of their in-house staff so they don’t have to turn away business that their regular staff can’t handle.

5. Disaster Recovery : In a post-9/11 world, an offsite service bureau provides a U.S. company with additional backup protection in the event of a catastrophe, by warehousing data at a separate storage facility.