If you’re a business owner who gets overloaded with all the work that needs to be done, or if you have a lot of menial jobs that hinder you from completing the work that will drive your firm forward, it might be time to explore outsourcing.
This article examines why businesses opt to outsource work, how it might benefit them, and how to identify the best partner to handle these jobs.
At first look, outsourcing may appear counterproductive: contracting services outside the organization, usually physically farther away. However, upon closer examination, outsourcing is not only a wise decision; it is also becoming increasingly popular as a strategy for SMEs and giant corporations.
Why Do Companies Choose to Outsource Work?
Companies opt to outsource for various reasons, most of which are related to the organization’s general growth and higher revenue. The primary reasons for a corporation to outsource are:
- Access global talent
- Adopt specialized software
- Facilitate growth
- Increase profitability
- Save time and money
If you’re considering hiring an outsourced staff or wondering about the importance of outsourcing in today’s business landscape, here’s a closer look at the motivators.
Increase profitability
Outsourcing work allows you to employ when you need to and will enable you to scale up or down swiftly. By adding personnel to your team for large projects (such as an event or product launch) or periods of significant development, you can save time or enhance capacity. However, because there is no long-term commitment, outsourcing can be an excellent strategy to manage your cash flow because it allows you to redirect funds to other parts of your firm.
However, keep in mind that good contractors (like good workers) are not always easy to find. If you fire someone, they will look for other employment and may not be accessible later. As a result, be honest with your providers about what they may expect regarding recurring work so they can join the relationship with realistic expectations. Then, if you come across someone you can’t afford to lose, think about setting up a retainer to keep them engaged.
Facilitate Growth
According to the US Bureau of Labor Statistics, only half of the new businesses survive for more than five years. As initiatives seek to scale at the optimum rate, the first five years are perhaps the most challenging and demanding of any company’s life cycle. According to a McKinsey research, a tech business growing at a 20 percent annual rate nevertheless has a 92 percent chance of failing.
So, what is the solution? Increased growth. To be successful in business, you need more than just an idea; you also need infrastructure and people to advertise, manage, and support your growth. Outsourcing is a simple solution for accelerating hiring and training processes and generating teams ready to help the firm grow quickly. Rapid growth necessitates the rapid acquisition of talent, which is one of an outsourcing company’s primary capabilities.
According to CSO Insights, 37% of sales reps fail to meet their quotas in a traditional sales team. Meanwhile, 79% of the organizations polled said they were able to scale faster as a result of outsourcing their sales activities.
Access global talent
Outsourcing allows you to attract and employ world-class talent, increasing your chances of success. Moreover, you can profit from the advice of professionals, professors, scientists, thought-leaders, and others by taking advantage of the best you can afford. Even better, you don’t have to try to keep these specialists working for you. Instead, you pay for access for a few hours or a 40-hour week.
You’ll also be able to refocus and move forward. Company culture might be challenging to manage when you have in-house employees. Caring staff can be a drain because it diverts your attention away from your key business strategy.
Adopt specialized software
Tools designed to ease a process can be costly and time-consuming to implement in a firm, mainly if staff are unfamiliar with the tool and require remote training and supervision. Furthermore, any initial investment may be squandered entirely if it is not adequately integrated or the appropriate level of support is not accounted for. As a result, many organizations outsource work that requires expensive and time-consuming integration of products.
Outsourcing tool-specific work to an external vendor specializing in complicated tools and developing them with an advanced support team is often more advantageous. For example, if your company wishes to enter a new market, outsourcing market research to an outside vendor can offer you valuable data and local insights that you would not have had access to otherwise, owing to time and expense restrictions.
It’s also worth mentioning that more than 93% of businesses have implemented cloud-based solutions to make it easier to collaborate with outside partners. However, moving to the cloud has highlighted concerns about data security, mainly when working with third-party providers. Approximately 45 percent of firms believe cloud services are insufficiently stable or reliable, and 35 percent are concerned about losing intellectual property. As a result, many firms wishing to outsource work to third-party providers will weigh the risks and benefits of transitioning to the cloud.
The market for business process outsourcing (BPO) is predicted to hit $405.6 billion by 2027, growing at an 8.0% CAGR, demonstrating that an increasing number of companies are choosing to outsource work to save money, gain faster access to tools and resources, and scale their businesses more efficiently.
Save Time and Money
The average cost of onboarding a new full-time employee in 2019 was $4,125. This statistic grows tremendously for organizations that need to grow significantly and quickly. On the other hand, outsourcing is estimated to save businesses up to 20% on overall process costs. These savings can be used to invest in other parts of the business, which is a significant benefit for smaller companies that may need to focus on marketing.
Similarly, because outsourcing streamlines the employment process, it frees up significant time for businesses to focus on essential business requirements. Outsourced teams handle critical components such as sales and customer support, allowing companies to focus on higher-level vision and procedures. In addition, outsourcing firms are responsible for establishing trust with their clients, ensuring that targets are routinely met, and removing the need for micromanagement.
Why companies choose to outsource – Conclusion
Companies never outsource lightly – the risks and benefits of outsourcing are substantial. Outsourcing can drive a corporation to success by increasing its market share, allowing it to scale, and uncovering new revenue prospects. Spend some time researching the various tools and resources available if you determine that outsourcing is the right plan for you.