The recent trend for Portfolio Companies (PortCos) acquired by Private Equity (PE) firms is to ally with a strategic partner for their business strategy and core business operations. This partnership helps PortCos improve their bottom-line results after the acquisition, and the Private Equity firms get their return on investment. Some of the outsourced business operations include F&A, HR, Legal, Customer Support, Service Delivery, G&A, and IT, giving PortCos the time to focus on increasing profit.
What is Offshore Outsourcing?
Offshore outsourcing is the practice of hiring a vendor or company from a different country to perform a task or function at a lower cost and to take advantage of the vendor’s expertise. There are many advantages to offshore outsourcing – let’s take a brief look at them:
- Access to Seasoned Experts and a Large Talent Pool
Since Portfolio Companies are expected to show significant growth within a limited period, their best option is to approach an external vendor with a large pool of skilled talent. Offshoring is particularly useful if the PortCo does not have the required talent in the area or if the company is looking for specific skill sets.
- Cost Saving is Assured
Offshoring can help PortCos lower their operational costs by up to 70% depending on the location. Lowering expenditure owing to moving to a low-cost location leads to an increase in the profit margin.
- Uninterrupted, Round-the-clock Support
A possible obstacle for offshore outsourcing is time zone coverage, as most clients are located in different regions. Vendors have overcome this problem and provide round-the-clock business coverage with modern technology and efficient cooperation methods.
- Comprehensive Team Support
Since outsourced teams work on a particular project for a defined period, the vendor has the liberty to increase or decrease the team size based on the business volume and requirements. Temporary assistance from a larger team will help the company meet deadlines and result in financial savings.
Aeries’ Place in the Offshore Outsourcing Market
Generally, companies that offer outsourcing services follow the subsidiary or vendor model. As an expert in outsourcing services for PEs and PortCos, Aeries has adopted the Purpose-Built model that captures the best features of both the subsidiary and vendor models. This next-generation service delivery model has helped Aeries’ clients manage their talent, technology, and operations delivery requirements cost-effectively and efficiently. The client organizations can focus on scalability, innovation, and increasing profits without worrying about tax, regulatory, and compliance issues.
Aeries Offerings for PEs and PortCos
In addition to outsourcing services, Aeries has been working in the PE PortCo space for 15 years and has deep knowledge and understanding of the transactions that take place in the PE world, like M&A and Carveouts. Aeries has expertise in consultation and advisory services like due diligence, valuation, TSA deadlines adherence, carve-out support, stand-up, post-transaction technology planning, and integration. With these services, Aeries can ensure that you have a strategic business partner who can handhold you through your M&A worries.
In conclusion, offshore outsourcing is necessary to sustain Portfolio Companies by managing their business operations, processes, technology, security, and compliance through market-agnostic solutions.