Businesses like to save money and build profits. Thankfully, since the 1970s, they have an option to rely upon – outsourcing. Since the 1990s, outsourcing has been one of the top options for companies to save some money and refine certain operations of the business. To understand more about reasons to outsource, it is important to have a general understanding of outsourcing and how the entire process works.
What is Outsourcing?
Outsourcing, often regarded as a business model, has become the most common and effective ways for business owners to run their ongoing business operations. It is a general business practice where one company hires another company (individuals) to perform certain services or produce goods.
Generally, these tasks can be produced in-house by the regular staff of the company. However, based on various reasons, a company decides to outsource its day to day operations.
Types Of Outsourcing
There are multiple ways that you can outsource the desired operations of a business. Different companies prefer different outsourcing options. Presently, there are 2 different types of outsourcing that people can opt for.
- Onshore Outsourcing
- Offshore Outsourcing
Onshore Outsourcing
Onshore outsourcing companies are located within the company’s own country. If you don’t want to outsource thousands of kilometres from your present office, onshore outsourcing can be a great way to outsource business operations. Many people choose onshore outsourcing only because they don’t have enough space/staff to accommodate new work.
Benefits Of Onshore Outsourcing
- The outsource team is located in the same country and is easily approachable.
- No language barriers as they will have the communication quality you are looking for.
- Better understanding of projects that involve an understanding of the area.
- Availability of better resources.
Drawbacks Of Onshore Outsourcing
- It is not as cost-effective as offshore outsourcing.
- Lack of business understanding
Offshore Outsourcing
Offshore outsourcing is when a company located in a developed region outsources its business operations to a far-off country. These countries have inexhaustible resources, talent and technology. The most popular choices of offshore outsourcing are Pakistan, India, Ukraine and the Philippines (there are other options as well).
Benefits Of Offshore Outsourcing
- Unmatchable pricing
- Increased productivity
- Greater returns
- Availability of high-end technology
- Better business understanding
- Availability of staff 24/7
Drawbacks Of Offshore Outsourcing
- Language and communication barrier (sometimes)
- Lack of regional understanding
Who To Outsource To?
From high-end businesses to home-based freelancers, there are a lot of options when you think of who is the right party that can manage your business operations without any issues. However, before you finalise the entire thing, here are a few key factors you need to contemplate:
- Tasks that needs to be outsourced.
- Language requirements for the task.
- Modifications required for task completion.
- A requirement of skill level.
- Adjustment with different time zones.
What Can Be Outsourced?
There are different types of tasks that can be outsourced. Some of the most common projects that are generally outsourced are:
- IT and development outsourcing
- Operational and virtual assistance projects
- Manufacturing and industrial outsourcing
- Marketing projects
- Business process outsourcing
Reasons To Outsource
When companies consider outsourcing, they think of utilising benefits like:
- Easy labour
- Cost-competitive pricing
- Refined quality of work
In reality, there is more to it. Let’s discuss some of the major reasons to outsource that businesses should consider:
Control Over Business
Opening a business is not the only thing that you need to think of. There are many other things that go into it. Two major things businesses need more than anything else: speed and control.
- Speed gets your item to advertise rapidly
- Control allows you to receive the rewards for the prosperity of business
Your outsourcing partner will manage contracted operations, handle tasks, or offer types of assistance that are obviously specific, costly, troublesome, or related to business.
Economical Solution
Outsourcing is the go-to option for many companies just so they can reduce their expenses. Onshore companies are not that cost-effective hence many businesses consider offshore companies as a cost-effective outsourcing measure.
The question is, how much reduction in expenses can someone expect by outsourcing their business to an offshore outsourcing company?
Outsourcing can reduce your operational costs by almost 70% when it’s contracted with an in-house group. For new companies, this could be the distinction that helps them acquire successful marketing while keeping overheads low. Forget paying each employee individually and simply get multiple benefits contracted under a single invoice.
Skilled Staff
Investing in hiring, firing and training employees is a thing of the past if you are opting to outsource your business functions. Professional outsourcing companies are able to provide their clients with their desired staff.
They consider running their outsourcing company as a full-time work and based on that they hire the best employees in the market. You can easily get proficient staff who will accommodate all your business requirements at very economical prices.
Improved Operational Efficiency
Companies can spend a sustained period just deciding a particular specialist for their company. The process of recruiting can take weeks – even months to find the best fit for their organisation. After that, you have to train them, make them aware of the company rules, pay them a hefty amount and deal with their personal and professional issues.
By outsourcing, you are able to expand your business without the hassle of building separate departments for each company. These companies hire professional and well-rounded individuals who are familiar with the type of business you are running and effortlessly capable of fulfilling your requirements.
Thus, the capacities you’ve assigned can be finished both adequately and proficiently by profoundly prepared specialists in the field who can execute their abilities and information right away.
Enhanced Productivity
Many companies are looking for methods to enhance their productivity and proficiency in terms of staffing. When you are outsourcing, this is not even a part of your concerns. As discussed above, outsourcing your operations will put your business-related tasks in the hands of highly-skilled workers. With such skilled workers and professional specialists, productivity and performance are guaranteed to increase.
Compensation For Lack Of Resources
It is possible that a business might not have enough resources to handle a specific task or a certain department. For example, you might not have enough operators to handle the sales or your telesales department might need gear to give more hours in work.
Outsourcing companies have everything you need to perform at optimal capacity. They have everything you need:
- Modern technology
- Skilled team
- Backup management
- Keeping in touch with trends
24-Hour Service
You might not be able to have people to sit in your office throughout the year but outsourced staff can provide you with day in and day out administrations for 365 days per year, without holidays or excuses.
Focus On Core Business Activities
One of the most important reasons to outsource is that as a business owner you will be able to focus more on your major aims of the business and drive your in-house team towards the long-term strategies and growth of a business. This would help you stay ahead of your competitors and yield future prospects.
Adaptability
For the sake of growth and moving in the right direction, a business must be able to adapt to different changes. It must have the option to respond properly to all the changes that come with it.
Outsourcing companies always stay in touch with the market so that they are able to provide high-end services to their clients. They will put more energy towards staying on top of trends, evaluating them and also offering methods to change your business in accordance with market and customer preference.
No-Risk Management
Every business has to deal with a specific amount of risk. Departmental risks can be eliminated when the department is not operational in your business anymore. You can easily reduce the chances of your business to go through a potential risk because outsourcing helps you minimise the risks that are a threat to your business. Your outsourcing partner will develop contingency plans to handle the outsourced department in case anything goes wrong.
Final Thoughts
Outsourcing is a business model that helps people reduce their costs and deal with their business operations more effectively. There are several reasons to outsource that a business should consider getting benefits like cost savings, professional skills and adaptability to trends.
