To rent or to buy?

Today, I show you alle, why renting instead of buying is often more economical. In our world of division of labour, production and services are becoming increasingly fragmented. Where 30 years ago you could get everything from a single source, today many companies are involved. But why is that?

The buzzword is specialisation
Let’s take the example of our own programming department. Many companies used to have their own data centers, IT software departments, etc. The biggest advantage is that you keep (supposedly) control over what happens. You can give instructions, order software or enlarge or reduce the size of the data center in the shortest possible time.

Things “belong” to the company, you can dispose of them freely. But the difficulties are much bigger.

Poor scaling
There are peak times and times when fewer resources are needed. You can adjust contracts for purchased goods and services. A software department that is 50% no longer needed because, for example, a large project has been completed costs money and cannot be used efficiently. These then become a cost factor and tear the company in difficulty or into the abyss in the worst case.

But also the other way around, when suddenly new employees are needed, long times for searching and training employees are a problem. Especially in markets, where it is hard to find good people. Most European countries suffer from a demografic change and have huge problems, to replace jobs, that require high level technical skills.

No specialization
A company that does not have its core competence in one area will never act as well as a specialist on the market. He has his focus on the special field, with all the consequences: Further training, knowledge of the industry, networking with competitors, etc. He will always be able to offer a certain service at a better price-performance ratio than the company which, for example, operates the software department only incidentally.

Rental of goods
What applies to the outsourcing of services naturally also makes sense for goods. Especially in the area of company vehicles, it has been customary for years not to buy them, but to rent or lease them.

This is conceivable for all kinds of objects that are only needed temporarily and should therefore be rented instead of purchased.

For example, if you need accessories for company parties, you can rent them as event catering. The advantage is obvious again:

  • The caterer does not need any storage space, thus saving space.
  • He does not have to invest any capital, he pays for the concrete use.
  • The products are up-to-date, so he doesn’t have to renew his products regularly if they get out of fashion or technical progress has progressed.
  • Appropriate means of transport are provided.

For example the provider EMS, an Event Service in Hanover, is currently looking for employees in its job portal, so there is a high demand for the outsourcing of goods and services.

In my opinion this trend will remain unbroken. Especially the possibilities of communication via the Internet make the communication between the individual participants of the economic networks efficient. And since this will be further expanded and supported (artificial intelligence, availability of participants, automation,…), we will see further areas in which renting will prevail over buying.