Last updated on Jan 4, 2023 by Gamex Studio
What is outsourcing and why it can be a powerful tool for your business?
Outsourcing means that you are delegating part of your services, or labor work/ tasks to third parties, external agencies, leveraging benefits from low-cost labor.
Outsourcing your services, work tasks, or part of your business convert fixed labor costs into variable costs, which means that you only pay for the services directly when you need them, usually at more valuable prices.
Those variable costs can help your business become more agile, productive and effective.
8 Benefits of Outsourcing
Here are 8 Benefits of how outsourcing can impact your business:
1. Increase your productivity and efficiency
Outsourcing part of your business, get you more time to focus on more important things. When outsourcing make sure to delegate your work to niche experts who will run your work effectively.
2. Save time
Help you save time when you are overly saturated with daily activities. Who don’t like to save some time, and delegate some of the tasks to individuals, those with experience, experts on the specific field?
3. Save on labor and operational costs
This is the main reason most companies decide to outsource part of their business/services.
4. Improve the quality of your services
By outsourcing part of your services, you are getting access to international experts in your fields. This is surely useful in cases you are not constantly educating your workers on their fields, and where your workers are participating just in some occasional seminars, webinars, or any other sources of increasing their knowledge. By outsourcing your services you are getting access to experts. Those that will do your work cost-effectively and you won’t lack on the quality of your services.
5. Increase customer satisfaction
Customer satisfaction is important to scale your business. As you save more time by outsourcing, you can focus more on core business, which will help you increase the satisfaction of your customers further.
6. Get access to the latest technologies and niche experts
Niche experts use the latest, modern technology that will increase the quality of your services.
7. Working internationally? Cover your services 24/7
Is your business present on the global market? Think about establishing client support or online offices overseas, to cover your business support 24/7 or to reach out to your customers within their working times according to the Time Zone.
8. Focus on things that matter
Saving time with outsourcing means that you can now easily focus on the core mechanics.
Disadvantages of Outsourcing
Not every business have only the benefits, so here are 4 disadvantages to keep in mind when deciding about outsourcing your business:
1. Different Time Zones
This might also be an issue when you are working with an offshore partner, and you need an urgent work to be done immediately. The Time zone can ruin the communication if work is not planned in advance.
2. Different Culture and Work Habits
Different cultural environments can interrupt your workflow, as both of the partners will need some adjustments to get used to the work habits
3. Language barriers
Language barriers can result in wasted efforts, as the communication between both parties is not understood equally or some things can get lost in translation.
4. Security risks
If you are working with the customer data, stay extra cautions who to process the data, as you can be placing the security of customers and your business at risk.
What parts of businesses do companies usually outsource?
Outsourcing is mostly used for:
– IT Support solutions, programming
– Social Media Managers
– Translations & Writing
– Digital Marketing services
– SEO services
– Design & Graphics
– Video Editing & Animations
– Business
– Lifestyle
Outsourcing part of the work to a 3rd party can help you reach bigger goals this year
(real example)
Reported by the CNN – Mike Scanlin has saved half a million dollars by outsourcing part of his services, without sacrificing quality.
In 2009, the software engineer Mike Scanlin started building Born to Sell, a tool for extra income on stocks, with which he is still helping out average investors to make a good living.
He was lacking programmers, and if he hired programmers in the Silicon Valley, it would cost him approximately $600,000 for about a year of work.
Source: Linkedin Mike Scanlin
Scanlin decided to make a brave move and hired programmers in Eastern Europe for just $37,000.
Programmers in Romania and Russia did the job great and he didn’t sacrifice quality, as they were software developers with Master’s degrees in computer science.
This was the first time Scanlin used outsourcing, and the results were outstanding. Although he experienced language barrier, and need to adjust the usual workflow, and even though the project took six months longer, still the benefits outweighed the drawbacks.
He thought as the corporate giants are doing it, why small businesses wouldn’t leverage with outsourcing their services?
4 Facts about Outsourcing
1. More than two-thirds (68 %) of large U.S consumer product companies are currently outsourcing some portion of their workforce
2. The top reason for outsourcing (70%) is cost reduction
3. Around 300,000 jobs are outsourced by the US annually
4. 24% of small businesses outsource to increase the efficiency of their business
Wondering who is the largest outsourcing company in the world?
This title belongs to a multinational technology company IBM, headquartered in New York – which is outsourcing its work to 383,000 people globally!
In TOP 5 we can also find Delloite, Accenture, Synnex and Tata Consultancy Services.
7 Signs that show a company should outsource their services
1. You don’t continuously train your employees
2. Your team or a specific department is lagging behind
3. You want to meet compliance requirements
4. Your business has grown quickly
5. Your business is lacking in creativity
6. You Projects requires niche experts
7. Customer service department is replying to customer emails after a week
Is pandemic changing the power of Outsourcing?
The pandemic changed many priorities and created the new reality. It showed us how critical it is to effectively manage our work, when we are forced to do it from the comfort of our homes.
In order to survive the crisis, transform and lead productively, lots of the service providers, especially in the IT and similar services, were forced to use the power of outsourcing.
Some were familiar with it before and easily adapted to the new standards, but other less agile organizations needed to adapt later, and outsource part of their work offshore.
The trends are showing in the direction of the worldwide digital transformation, so companies will continue to depend on the outsourcing services (at least some part of the company), and it seems also like the companies are now willing to invest more in developing in-house capabilities.
The pandemic hit hard, and lots of the companies saw revenues fall, or were faced with operational challenges, were they weren’t in option to increase the fixed labor costs, but compensate the work by hiring cheaper labor.
Want to start outsourcing, but don't know where to start?
The most commonly used outsourcing services everyone can get are available via various freelancers and outsourcing sites, where you can communicate directly with those that offer various services.
Here are our TOP picks:
Pros:
– Fast Services
– Platform is easy to use
– Free to Join and browse
– Potential long-term collaborations
– Wider selection of services than Freelancer
– Better prices
– Pre-defined scopes of work
– protects buyers and their purchases
Cons:
– Extra platform fees for service buyers
Pros:
– protects buyers and their purchases
– As a buyer you can check sellers platform stats
Cons:
– Pricey
– They take service fees from buyers and freelancers
– hire per hour/project (scope of work is not pre-defined)
– self-reported skills of service sellers (may be hard to check if eligible)
Other outsourcing options
Hire Outsourcing Agencies for the most cost-effective work!
Picking the best persons to hire might be time-consuming, and it might require a lot of time to discuss the specifics of your project, so lots of people are now heading towards Outsourcing Agencies, where the Agency transfer your work tasks to their international team of experts on various fields, and this might be more cost-effective than if you are doing all by yourself.
Final thoughts
If you are still not using the power of outsourcing in 2023, you are missing out on an important competitive edge! Outsourcing is becoming more common in everyday work, and many businesses are lowering their operational costs, getting more available time to focus on things that will help further scale their business. Like Mike Scanlin already mentioned, he manages to save half a million dollars by using the power of outsourcing. Outsourcing is generating agile companies, with lower operational costs, while increasing the quality of their services.
How and where to start?
– Define the field where you can easily outsource your services
– How many hours a day does that kind of work take?
– Define the budget/ available funds for outsourcing?
– Go on Fiver or Freelancer and find a skillful person who will meet your work needs
Want to reach your weekly, monthly, yearly goals? Outsource!
What kind of advantage do you need to complete your goals?
Outsourcing is now more important than ever!
– Got a new business deal, but you don’t know how it will end up and don’t want to hire extra laborers – OUTSOURCE part of your service and decrease your labor costs.
Think about the part of your work, which you believe you should outsource today, to scale up your business.