Hidden Costs in Your Business That Can Eat into Your Profits

Dec 22 2014

There can be hidden costs in running a business that cause unwanted and costly surprises. Many of these hidden costs can come from offshore outsourcing in functional areas of information technology (IT) and manufacturing.

Each of these presents a unique challenge.  Let’s take a look.

The Offshoring of Information Technology

CIO, an online resource that works to “[serve] Chief Information Officers (CIOs), other IT leaders, as well as the ecosystem that surrounds and interacts with them” recently posted an article entitled “The Real Cost of Offshore Outsourcing.” It indicates that companies who have outsourced their call centers overseas have suffered customer losses due to poor customer service, inadequate employee training, and cultural disconnects. Other companies have found themselves involved in cases of forged invoices and other fraudulent documents. 

Part of the challenge is that many companies sent their IT overseas before gaining a full understanding of the legal costs of doing so. Most companies are then surprised by the cost of rebuilding the IT infrastructure after the loss of expertise, otherwise known as intellectual capital and intellectual property.

The Offshoring of Manufacturing

Offshore manufacturing can cause a supply chain to break down. A Bain & Company article entitled “Finding the Hidden Costs in Broken Supply Chains” states that the reasons for this can include border delays, inconsistent product regulations, cultural disconnects, and corruption. In addition, currency volatility and the costs of both risk and quality can take a toll on profits. Unrevealed commissions and anti-dumping duties, rising gas prices, and manufacturing waste can also create unplanned for expenses.

If you are experiencing any of these hidden surprises and are looking for a way to manage them, Mantralogix has in-house expertise in designing, developing, and implementing solutions for financial, manufacturing, and distribution verticals. With our services and tools, your company can be both more efficient and more streamlined. Contact us to learn more about our methodology.

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