Outsourcing 101: Everything You Should Know About It

Outsourcing — What it is, why it works, and how you can do it

As businesses grow increasingly complicated and services ever more specialized, it’s little wonder that more and more companies are turning to outsourcing as a means of increasing competitiveness. From IT maintenance to manufacturing to janitorial work, outsourcing opportunities are abundant in today’s market — but does that mean outsourcing is right for everyone?

Let’s look at just what outsourcing is and why it’s quickly becoming a leading business practice in today’s market.

What is outsourcing?

Outsourcing is the process of contracting with a third party to complete certain projects or tasks, rather than hiring a new employee or assigning the project or task to a current employee.

According to Clutch’s Small Business Outsourcing Statistics in 2019, the business processes that were most likely to be outsourced include IT services, digital marketing, HR processes, and customer support.

The benefits of outsourcing

For many businesses, the main benefit associated with IT outsourcing and other outsourced processes is reduced costs. In fact, Deloitte’s 2020 Global Outsourcing Survey found that approximately 70% of surveyed businesses implemented outsourcing mainly to lower costs.

While larger businesses are more likely to outsource than smaller businesses may be, the truth is that most companies can benefit from outsourcing no matter their size or scope. This is because no matter what processes are being contracted out, the very act of outsourcing offers several benefits including:

  • Reduced costs
  • Increased efficiency
  • Opportunities for greater focus
  • Increased flexibility
  • Opportunities for knowledge exchange
  • Cut costs and keep them low

When it comes to outsourcing vs. hiring costs, outsourcing may help companies save in the long run. While hiring an employee incurs various expenses for searching, on-boarding, paying out benefits and taxes, and more, contracting out negates many of these costs. Additionally, some specialized employees such as IT employees can be more expensive to employ because they have higher overhead costs.

Outsourcing certain processes such as IT work can also help save on the expense of specialized equipment, complicated infrastructure, and additional education, training, and internal programs.

Maximize efficiency and productivity

Outsourcing allows internal staff and contractors to work on the projects that best suit their knowledge and experience. As each team member uses their unique skill set to produce high-quality work, businesses can enjoy increased efficiency that will promote greater productivity and growth.

Allow internal staff to focus on important activities

Businesses that use outsourcing allow permanent staff members to focus on important tasks. Rather than investing time into repetitive and time-consuming activities, employees can dedicate their time to more important tasks that will help the company thrive. This is especially true for necessary yet technical or specific processes such as IT management or tax services.

Maintain a more flexible talent pool

While many companies may be constricted by the local talent pool during the hiring process, outsourcing helps negate this issue. Contracting with professionals lets businesses greatly extend their range and find the right talent in other parts of the country and even across the globe.

Additionally, certain processes, such as most IT tasks, may not require full-time involvement, in which case outsourcing vs. hiring will allow a business to save in the long term.

Exchange knowledge and promote learning

Outsourcing work to qualified and knowledgeable experts isn’t only good for a business’s projects and workload; it can also benefit a company’s current employees. Bringing in highly educated or experienced professionals can allow internal personnel to learn from the contractors, develop new skills, and grow into more valuable employees.

Hiring through outsourcing agencies

Outsourcing certain jobs such as IT management and maintenance, accounting work, or other processes may help companies remain competitive and relevant in today’s market, though companies should note that any good outsourcing relationship requires good communication to reap the rewards.

If your in-house team is struggling with certain processes or projects, an outsourced contractor may be the ideal solution to help increase innovation and make your company more relevant and competitive.

Many IT staffing agencies and other outsourcing agencies exist to help businesses find and vet a contractor before hiring. Reputable outsourcing agencies will help simplify the process of finding the perfect partner or contractor and ensure that your business has access to only the best contractors.

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