“Master your strengths, outsource your weaknesses.”
– Ryan Khan, Founder of The Hired group
Since the 1970s when manufacturing businesses seeking efficiency began hiring outside firms to handle less-than-essential processes, outsourcing has proven to be an integral part of business economics. While it was not considered a formal business strategy until 1989, outsourcing has always allowed organizations to focus on core business operations while improving efficiency and productivity by having another party perform smaller tasks.
Organizations can outsource for numerous reasons including reducing and controlling overall costs, improving employee focus, liberating in-house for new purposes, and increasing overall efficiency. If an organization is considering outsourcing, there are several signs that show that they are ready. These include signs such as:
- An organization cannot provide the level of customer service that they aspire to
- Tasks require specific knowledge and skills that are not available in-house
- There is too much time and energy spent on non-core functions
- There is a sudden increase in demand
- An organization plans to significantly expand
- An organization has innovative ideas that cannot be brought to life due to lack of resources, knowledge, or time
- Stress levels of management and employees is beginning to affect productivity
- Sales have flat lined
- No one wants to do the repetitive, boring tasks
- Spending too much time on accounting processes
- Deadlines are frequently not being met
- There are delays in accounting or payroll
- Overall workload per employee is too much
- Quality of work is declining
- Careless mistakes are becoming too common
Making the Most of Outsourcing
As for most things, there are some downsides to outsourcing. These disadvantages can include communication difficulties, security concerns, legal duties, and it has the potential to disrupt the labor force. There are ways to overcome these disadvantages and create a successful outsourcing operation. When performing an outsourcing operation, it is important to remember the following:
- Outline clear goals and objectives for both parties
- Strategic vision and thorough planning
- Careful selection when it comes to vendors
- Well-arranged agreements with vendors
- Consistent, open communication
- Strong leadership that is supportive, communicative, and involved
- Detailed attention to any potential issues between employees
- Keeping financial justifications short-term
Properly introducing outsourcing to an organization can offer almost immediate benefits no matter what profit range, size, or industry the organization falls in. Most businesses flourish when teaming up with external partners or services for several reasons such as overall cost reduction, increased daily efficiency, better work-life balance, more manageable workloads, access to knowledge/skills/resources that were not accessible before, variable capacity, increased in-house focus, increased flexibility to meet any business changes, possible cash influx, and access to a wide pool of experts.
There are also plenty of tasks that can be outsourced from time-consuming to repetitive, anything can be outsourced these days in business. These tasks can include but are not limited to:
- Social Media Marketing
- Website Management
- Graphic Design
- Audio/Video Editor
- Data Entry
- Administrative Tasks
- Content Creation
- Email Marketing
- Customer Service
- HR Tasks
Outsourcing in Response to the Pandemic
While COVID-19 changed priorities and created a new reality for business, outsourcing is still an important factor in running in business and the pandemic highlighted how critical it is for business efficiency during uncertain times in turn making businesses even more reliant on outsourcing than past years. In fact, outsourcing will remain so prominent that businesses are expected to spend $700 billion per year on it by the end of 2022 with IT being the most common outsourced service according to explodingtopics.com.
One of the most significant changes that businesses underwent in response to the pandemic was going more digital and creating more remote working opportunities for their business. Outsourcing is already a more remote based service so when businesses were forced to change their business model in response to needing a more digital lifestyle, outsourcing became a more prominent option for any business. As of 2022, the most common outsourced tasks include IT, administrative services, accounting/finance, sales/marketing, HR, legal services, customer support, tax prep, computer programming, manufacturing, shipping, and web design.
Businesses who had to reassess their stargties and the way they operate with the additional resources offered by outsourcing can give them the opportunity to create a pool of additional funds and enable opportunities for growth and innovation even through times of uncertainty. In times when money is tight or unpredictable, organizations who outsource can reduce expenses by eliminating the need to hire or train new employees and reduce expenses from non-core activities. They also could increase occupancy costs, have access to in-demand talent, stay ahead of the competition, focus on employee well-being, and scale their business accordingly without excessive hiring or firing.
The bottom line is outsourcing creates new, exciting business opportunities and makes better use of existing talent allowing businesses to continually get the most out of their current workforce without succumbing to the damages many businesses faced during the pandemic.