Outsourcing – A Lucrative Option for Energy Companies

With the increase in output of the black gold, lifting of the international sanctions from Iran and discovery of Shale oil, the expectations and sentiment of the trades of oil started to turn bearish in the end of 2015. This led the oil prices to decline to less than 40 dollars per barrel. This reduction of the oil prices and the prediction of IEA that the oil prices will remain low for an extended period of time made most energy companies tighten their budget and led countries like Saudi Arabia to cut on its government spending and Canada to reduce its interest rate and other oil exporting nations to take steps to protect their economy from going into recession.

Now in order for the energy companies to be profitable in such a business environment, they have to reduce their overhead expenses and this could only be achieved by outsourcing non-core activities. Most of the energy producing companies in Australia do the non-core work in-house, which is costing them large amounts of money and is draining their financial resources.

In the same way most of the Forbes Global 2000 companies use outsourcing as a business strategy but only 36 percent of oil and gas companies in Forbes Global 2000 have outsourced their non-core activities; this shows that there is huge work to be done in the oil and gas sector around the world and outsourcing is one way that can increase the profit margin for these companies. Currently, only Saudi Arabia has the lowest cost of production of oil and is thus the least affected one, but for other companies to survive they have to lower their cost by outsourcing general and administrative tasks that are consuming financial resources of the firm but are not directly helping in the core business operation.

So the good news is that the energy industry can still take advantage of this oil price slump by implementing cost optimization strategies and outsourcing. Australia exports around 11 billion dollars worth of oil every year and this figure of 11 billion will reduce if the oil prices continue to remain in a free fall state.

If you are deciding to outsource some of your business operations, then we at roweSMG will be glad to guide you through the process. For more information about our outsourcing services, visit our official website or call +61 (0) 419 942 427. We are looking forward to hear from you.