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can we survive it?
What caused it and how can we survive it?- The Recession that is!
People are losing their jobs by the thousands around the world every day. It came on hard and fast. Unemployment is set to double in less than 12 months in many countries. Many old and venerable financial institutions that have survived worse over the centuries have gone down. Never to be seen again. Who and what is responsible? What is the reason behind it? What were those policies and practices that gave birth to this catastrophic situation?
Well, American (as well as other) sub-prime home loan mortgage financiers have for years been lending money to high risk borrowers i.e. people who were a high risk of defaulting. As the name suggests. Not prime borrowers, but sub prime borrowers. So the banks did this and they bundled all these sub prime loans and hence borrowers together and they got a rating agency to give them a sufficient rating that they could be sold as an investment return to the pension funds etc. In the past the absence of this technique meant that a lot of these borrowers would not have got a look in.
Why did the mortgage lenders do it? In addition to the margins they made on the loans, they saw a steep rise in the property market and the equity created by that, would allow them to cover any defaults. The other interesting aspect of the American market is jingle mail. Under government legislation certain property borrowers who cannot make payments, just mail the keys back to the lender and walk away.
In any event, interest rates went up, borrowers defaulted in large numbers and property values declined. Banks put the properties on the market in increasing numbers and the property market fell further because of the oversupply and continues to fall. This flowed through to the general stock and investment market worldwide.
The institutions lost large sums and sacked large numbers of staff and put a credit squeeze on new and old borrowers which depressed other businesses.
This process continues and governments worldwide are trying everything to halt this downward spiral.
How can outsourcing companies get us through the recession?
To paraphrase Bill Clinton during his initial election campaign, it’s the massive costs savings stupid. By using Businesses Process Outsourcing even though your company may be suffering a lack of working capital you can kick start your business again without having to undertake expensive capital expenditure. You just tap into the existing infrastructure of outsourcing companies and pretty soon the bank balance goes into credit.
If a business is in survival mode what better strategy can you bring than reducing your administrative overhead costs by 50%. The positive is that more and more business will come to understand the staggering financial benefits.
What are the tangible benefits from outsourcing when you the business owner and their company are in financial meltdown?
the routine tasks are done letting companies focus on their prime issues, primary strengths and core competences.
Saves companies revenues by reducing overhead costs and any additional infrastructure, man power etc.,
Outsourcing eliminates the hassle and expenses of hiring and training new employees.
It takes away the owners panic, and provides a substantial positive to the business so turnaround decisions may be made
Setting up of offshore operations with minimal capital investment.
Conclusion
The best way to fight back is to contact an outsourcing company and outsource as much as you can, as fast as you can. When that cash flow starts turning positive you’ll wish you had done it sooner. It will also allow you to save some key employees jobs and the loss of proprietary knowledge that will give you an edge when the market turns around.
Published in the interest of small size business and industry by m/s 1300 BPO LP.
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