Outsourcing is a strategy widely used by many businesses to increase team productivity. It allows a business to acquire the resources they need to grow without hiring full-time employees, which saves a significant amount of time and money.
Along with the rise of remote work and workplace diversification, outsourcing became a critical aspect in growing and competing in today’s global economy. Although there are many misconceptions surrounding this strategy, these 5 benefits far outweigh the risks associated with failing to approach outsourcing properly.
Outsourcing allows businesses to acquire talent that they might not already have in-house. Some skills that can be outsourced include internal communications, customer service, product development, management and marketing.
However, outsourcing is not limited to skills – companies can also outsource physical assets such as property or vehicles. By adding new skills to an existing team and leveraging additional assets, companies can speed up operations and scale sustainably.
The biggest challenge associated with this strategy revolves around employee retention when organizations fail to treat workers fairly. While outsourcing can power up an organization skill-wise, employers consequently receive the responsibility of creating an environment where both workers and contractors feel valued despite not being full-time employees.
Business expenses can be minimized by outsourcing tasks that are time-consuming, complex, or are inefficient due to human error. Additionally, by hiring independent contractors, organizations can avoid costly tax regulations, hiring expenses, and payroll taxes and retain profitability.
Take for example a web development project for a startup. With the limited budget and skill set available in young companies, the project can greatly impact finances if the business were to hire a project manager, a designer, and a developer. Web development agencies exist to solve this problem, as outsourcing the task of building a website significantly cuts down on labor costs. It also allows the business to save money on hosting and maintenance as these services usually come with web development packages offered by agencies.
The risks involved in business can be mitigated by outsourcing skills and assets to independent contractors. This works in two ways: First, independent contractors don’t pose the same risks as employees because they are not entitled to benefits such as health insurance, time off, and retirement funds. Second, by outsourcing assets like vehicles and equipment, a company doesn't have to maintain them to use after a project is completed.
This works especially well for businesses that are starting to gain more customers but lack the resources required to serve a bigger market. Choosing to enter this new business phase always involves investing in new technology, staff, and equipment. Subcontracting these requirements to a third party, instead of purchasing or hiring, gives the company a buffer against issues that could rise as they scale up.
When a company finds itself in a good position to explore new opportunities or branch out, outsourcing can help you plant your foot more firmly within today’s increasingly global markets. One way to outsource is by offshoring, where a business arranges to get its work done by a skilled worker from a different country. Businesses typically consider offshore outsourcing for its cost benefit, but the gains can span into more than just lower labor costs.
Depending on where your outsourced roles are located, you may gain a time zone advantage from competitors by having offices that are in sync with different world business schedules. Many retail companies have seen significant growth in customer service from offshore outsourcing because it allows them to localize their offerings.
Several countries also offer tax breaks and financial incentives to entice foreign companies. By outsourcing a part of your operations offshore, you may discover more profitable market areas to tap into. Having trusted talents from the location helps you pivot into these new opportunities more quickly, compared to seeking out these markets from a foreign perspective.
When you house all your business functions in one team, things can get busy and complicated. Core functions tend to get overwhelmed by outside issues which can cause missed opportunities and failure in offering services and products that your customers deem worthy of their money.
Back-end operations, such as customer service, sales, or maintenance require significant attention. As long as you’re ready with systems and processes in place, subcontracting these responsibilities to a third-party can allow managers to focus more on central concerns of the business.
The increased efficiency and ability to focus on your core business functions also positively impacts customer satisfaction. By breaking your organization down into units, you increase your ability to respond quickly to changes or issues, so any customer complaints or company issues can be handled with more thought and diligence.
Outsourcing is one of the best ways to grow your business by accomplishing more in less time. It allows companies to accelerate time to market with access to new skills they don’t already have in house while still maintaining control over costs. Decide which departments would be best outsourced to a third-party and start looking around for experts who fit the bill. It may seem daunting at first, but it will do wonders for your bottom line.
If you are considering outsourcing your support team, IT development, or marketing services, NFT has a track-record of finding the right skilled talents for your business and getting the job done.
Contact us to speak to a specialist who can help you scope out outsourcing possibilities.