The global outsourcing market is valued at $90 billion and over half of all businesses use third-party support teams to interact with consumers. But, in the first place, why do companies opt to outsource work?
What Is Outsourcing?
Outsourcing is the practice of utilizing an external provider to do work or generate items instead of relying on internal staff. Outsourcing nearly any function or activity may be a wonderful way to expand your business with limited resources. It’s vital to understand the drawbacks so you can determine whether this is the appropriate option for you, just as it would be with any strategic business choice.
How Can You Know If Outsourcing is What Your Business Needs?
If you can answer “yes” to at least one of the following questions, it’s probably time for you to outsource:
- You must minimize operational costs.
- Your team has too many time-consuming chores that they can’t keep up within their current timetable.
- You already operate across several time zones, so remote employment will not affect your current communication strategy.
- There is a lack of specialized knowledge within your company.
- Outsourcing from overseas businesses allows you to benefit from economies of scale.
- You’re short on room — there isn’t much space for new in-house experts to fit in.
Why Should Companies Choose to Outsource Work?
Outsourcing may appear to be a negative option at first sight since it entails hiring services from outside the company, which is usually physically farther away. Outsourcing is not only an excellent idea; it’s becoming increasingly common among both small and large enterprises.
Many businesses choose to outsource for a variety of reasons, often due to the company’s overall expansion and increased revenue. There are a number of reasons why a firm may outsource, the most common of which being:
- Reduce Or Control Expenses
- Improve Customer Lifetime Value
- Improved Internal Focus
- Gain Expertise and Fresh Ideas
- Increased Productivity and Flexibility
- Enhance the Customer Service
- Risk Management
Outsourcing has a number of advantages that extend far beyond the potential for cost savings. For example, there may be times when you require knowledge that you do not have in-house. Perhaps you’ll need more personnel for an upcoming function. So, let’s dig into the many advantages of outsourcing, starting with the most obvious one:
- Reduce or Control Expenses
As a cost-cutting measure, many corporations outsource software development or manufacturing to other nations. Others, on the other hand, use outsourcing to manage expenses since their needs vary with the seasons. Some firms, on the other hand, discover that outsourcing may save them money in ways that are less obvious.
Imagine you’re the CEO of a tiny firm that developed an outstanding IT solution. You’ll need executives, accountants, marketing and salespeople, and a customer success team to help you expand. Hiring and training full-time staff are costly, and while contractor rates may appear to be expensive, these arrangements can save you a lot of money if you don’t need or cannot afford to hire people full-time.
For example, a small company (about $10 million in annual revenue) may anticipate spending roughly $200,000-$250,000 on a full-time CFO’s base salary. Bonuses, perks, taxes, overhead costs, and incentives (such as stock options) are all included in this calculation. Compare this to a fractional CFO, where an ongoing connection costs on average $7,500 per month, and you save about 75 percent!
- Improve Customer Lifetime Value
Another incentive for businesses to outsource work is to tap into new revenue streams. After all, if you’re considering experimenting with new methods, it’s more likely that you’ll hire a full-time employee. Fortunately, the talent pool is plentiful, with marketing and sales experts among other talents.
While you may discover generalists, it’s more advantageous to seek specialists. For example, you can locate specialists that have spent years learning specific marketing channels such as SEO, social media, email marketing, and paid search. Blog authors and white paper writers, for example, might be hired by businesses to write content for their blogs and white papers. Salespeople, on the other hand, are more likely to have extensive connections in a specific sector.
The goal is to find an expert who won’t need to be trained, allowing you to go ahead and work with confidence.
- Improved Internal Focus
When you’ve got the right individuals in place, you’ll have a lot more time to focus on day-to-day activities and outcomes. And this is true for executives as well as other members of your staff who might have been at risk of burnout.
This scenario may be represented by the marketing manager who is coordinating every marketing channel while developing new content as well as responding to inquiries from the media. Under that much strain, no one can perform well. If you engage a part-time expert who specializes in areas where they lack, their level of tension will be reduced and they’ll have more energy to focus on methods where they have more faith (and any cost savings).
- Gain Expertise and Fresh Ideas
When you hire someone for a part-time or full-time position, you gain knowledge and expose your team to fresh ideas. This might be a great help to an internal team that has gotten too entrenched in its own ideas. As contractors work with other organizations, they will continue to acquire new skills and knowledge.
Several contractors have long-term relationships with a number of clients and, in effect, “take control” of various sectors. Some business managers are able to do so because they understand the bigger picture (financial, strategic, and operational) and can make adjustments on your behalf. It’s feasible when a firm hires a contractor for one-time projects. However, whether the project is large or small, the experience adds to the contractor’s expertise and your profit from it.
- Increased Productivity and Flexibility
Outsourcing allows you to use it when you need it and gives you the flexibility to rapidly scale up or down. The addition of personnel to your team will help you handle larger jobs, such as a major event or product launch, as well as periods of rapid growth. Outsourcing can also help you manage your cash flow since it allows you to divert funds to other areas of your operation.
However, you should note that not all excellent contractors (such as efficient workers) are simple to find. If you let someone go and don’t have them available later, they will seek other employment. As a result, be open and honest with your vendors about what they may anticipate in the future so that they can set appropriate expectations for you. If you identify someone who is worth retaining on a retainer, take it from there.
- Enhance the Customer Experience
You may engage contractors to enhance the customer experience in all areas of your business. If you need extra workers to handle a rise in client inquiries, for example, you may employ them to minimize response times. You might also hire website builders and content marketers to enhance your website. They may help you spruce up your appearance, repair technical difficulties, clarify your messaging, and improve conversion rates.
When you don’t have the resources to hire a full-time staff, outsourcing work to a service or individual contractors may help you achieve some of the economies of scale that larger organizations enjoy.
- Risk Management
When a firm decides to outsource work, it may be for a variety of reasons. Outsourcing partners with access to sensitive data, such as CFOs and accountants, can assist you in detecting errors, identifying fraudulent behavior, and adding a layer of checks and balances to your business processes by allowing you to catch mistakes and even identify fraudulent activity. Although you can’t eliminate risk entirely, these safeguards augment your protection.
Outsourcing allows you to tap into a larger (often worldwide) talent pool while also reducing the cost of employing people, which entails administrative and legal difficulties.
Although remote work is somewhat less physically demanding, it might be more difficult because of the time zones and language barriers. If you’re willing to collaborate with people from all around the world, you’ll have a lot more alternatives for finding competent assistance.
How to Outsource Successfully
When you’re unsure if outsourcing is a good idea for your company, you’re probably asking yourself what it takes to be successful. You can start by advertising a job or two on LinkedIn or to a service like Upwork. However, if outsourcing becomes a major source of talent, you’ll need an outsourcing procedure. It will function similarly to your hiring procedure, but there will be fewer legal responsibilities.
Here are some tips to get you started:
- Examine your company’s goals against the services you have at hand.
Outsourcing is the best way to free up resources and cut costs. Review your objectives and determine whether there are any areas in which your team lacks. If you want to raise funds but the only financial resource you have is a bookkeeper, for example, you may need professional assistance. Clarify the job requirements and set a budget.
Document what everyone will do and how you will evaluate their success, just as you would for a full-time position. This can help you set expectations and attract the appropriate applicant for the position. It will also assist in establishing a realistic financial plan.
- Look closely at the job candidates.
Outsourcing is intended to give your staff a break. As a result, it’s critical to devote time and effort to the screening process. Naturally, you’ll want individuals who have the appropriate talents and experience, but they should also be trustworthy.
- Expect some training period.
The first thing that comes to mind when hiring a virtual assistant is that you’ll have to train them and introduce them to the team. Will everyone work well together? A big part of this will depend on the time you take to welcome the new contractor to your team. Introduce them to anyone they will work with and make yourself available for regular check-in meetings.
Outsourcing and GlobalityNet
GlobalityNet Keeps it Simple! Expand your piece of the pie through outsourcing. GlobalityNet will be with you every step of the way! At GlobalityNet, you can outsource:
- Accounting Jobs
- Supply Chain Positions
- Customer Service Work
Get your business to the next level with quality, foreign remote workers with great English. We’re the secret sauce for your remote hiring and outsourcing needs!
