6 Benefits of Outsourcing To Companies With Examples
Outsourcing is the process in which a company, firm or an organization hand over work to another organization or company who has the capacity or provision to offer a particular service in respect to value exchange or in-house personnel.
Any work process which can be handled, outside the location of the workplace can be outsourced. It has maximum flexibility with your workforce and access to some high-quality employees.
When it comes to dull or complex business tasks, many businesses choose to outsource these tasks to another company.
When you also feel so much pressure while trying to handle so many things, you need to start thinking about outsourcing.
Outsourcing helps to reduce the workload and creates unintentional or intentional teamwork to play, resulting in faster and better results.
It is a major tool in the workplace, business or an organization.
One way or the other, you get to outsource some of your activities because there are lots of people who are into what you do and you need to be proactive and efficient in giving the best.
Outsourcing can be done for processes like inventory management, customer care support, human resource etc. Most call centres outsource their work.
Commonly outsourced tasks include cleaning, content writing, data entry, editing services, typing work, transcription and data conversion services. However, there are many other tasks that can also be outsourced.
In fact, nowadays you can practically outsource anything to up your customer service game.
According to Michael Jordan; “Talent win game, team and intelligence win the championship”.
Here are 5 benefits to consider first and 8 examples of outsourcing services that could be useful, some of which you may not have considered.
In case you’ve not realized the benefits you can enjoy, here’s a list to go over.
1. Budget and Staffing flexibility
Outsourcing maintains financial and staffing flexibility in business when there is uncertainty in business. You can scale up or down comfortably at a much lower cost.
It provides an additional benefit for running in and out of working hours and public holidays. On the staffing aspect, outsourcing helps you coordinate your staff.
You can employ from a temporary agency, leased employees or contract worker. It let you pay employees for services they render alone as at when needed. Whether you are looking for a long-term contract placement or temporary contract placement, working with engineer staffing companies will add massive value to your company as they take their time to analyze your needs. Choosing an engineering staffing and job placement agency to help in recruiting top-quality engineers is essential for your company’s success.
2. Increased in-house efficiency & core activities
Outsourcing is usually done by professional experts. Therefore, a higher level of effectiveness at work will be the outcome.
Outsourcing with people or an organization that possesses knowledge of the work and have vast experience in that field can raise the standard of the work and it can be done in a fast and efficient way.
This enables quick development of ideas into concepts, and also helps in faster delivery of customer’s package and innovations into the competitive market.
It reduces the workload as well as pressure on you, makes work faster and allows you to develop your internal tasks force and use them effectively.
3. Success in multiple businesses
Engaging a service provider gives you the opportunity to have two or more businesses running effectively.
You get the time to do other things too. You have the chance and time to focus on other work activities. If you are running a restaurant, you don’t want to multitask.
You can’t be the chief cook and washer – it’s going to be stressful and time-consuming.
According to Steve Jobs “Great things in business are never done by one person”.
It’s better to employ people to do other tasks and pay them, I bet you they will be at the top of their game. They want to get paid and will be just as keen to see the job done.
You can start up a new project quickly.
Handling the same project in-house or all alone, might take a long time because you may have to be trained or train others. You have to provide the resources needed for the training and financial provision for the facilitator(s).
This generally slows the time scheduled for the project.
On the other hand, outsourcing gives you a competitive edge making you on top of your game.
In the end, you will not only provide your customers with good services but increase your productivity while managing your in-house resources. Outsourcing can help you surpass your competitors who have not adopted an outsourcing service provider.
5. Better risk management
One important thing you must know in business is working as a team. You share any associate risk too by partnering with an outsourcing firm.
For instance, by outsourcing to a competent partner, you reduce the risk involved in having the same task done by an in-house staff that may not be competent in that field.
With the assistance of the service provider, you can easily meet the demand of your costumers with the speed of light thereby increasing the turn around time.
With high-quality service, there’s increased customer’s satisfaction and additional streams of loyal customers and referrals. You could also gain access to new markets by taking the point of production and services delivery closer to the end-users.
You have the ability to upscale fast. That is a general increase on all sides starting from the creation to end product, prompt customer service and more sales resulting to profit.
6. Reduction of cost
Outsourcing allows an organization to obtain high-quality services and reduce operational cost.
For instance, if you run an online business as a start-up, you need the help of a logistics firm to help you deliver packages to customers.
You don’t need to purchase the truck. This reduces the cost of business, excessive government regulation, production/labour cost and makes running of the company affordable.
Here are some examples of outsourcing that can help you manage pressure
1. Answering the phone
Many of us hate answering incessant phone calls. Fortunately, there are companies such as Moneypenny out there that you can outsource this task to.
Phone answering companies are professionally trained to deal with general enquiries and other phone calls while they relay only the most important information and callers to you.
This could allow you to get on with core tasks without constant interruption from your phone. Many phone answering services operate 24/7 so that there’s always someone to pick up the phone.
2. Information Technology
This is a global phenomenon. It is an outsourcing approach that can be adapted by any company, especially companies that are into service delivery.
This allows you as a company to react quickly to rising demands, decreasing demands and changes in the target market.
It is preferable to use Information Technology Outsourcing for functions ranging from infrastructural, software development, maintenance to support.
For instance, as a business owner or employee, you might want to outsource for your IT management because it is cheaper to contract it to a third party than to build and train your own in-house IT management team. This will also help you to save time.
Companies must be capable of adapting their sourcing cycle to capture value in the market place.
In the world we are, web and broadband communication will allow you to collaborate effortlessly. Collaborations accelerate progress.
3. Chasing up late payments
Having to chase up debts from clients can also be an unpleasant task. However, this is a task that can also be outsourced via companies such as Daniels Silverman.
Such companies could help to collect the debts people owe you and help you maintain healthy cash flow. Then you can focus on other tasks.
3. Business Processes
This entails the back office and front office outsourcing such as payroll, human resource accountant, inbound/ outbound telemarketing, Virtual assistant, Technical support, Web development, Graphic design.
In adopting Business Process Outsourcing, organizational growth increases and you can concentrate on the core business areas. Employees have the opportunity to invest more in strategies.
Overall, it saves time, helps you explore new revenue areas, accelerates other projects and increases focus on your customers.
You’ll agree with me that companies today require productive and efficient human resources to generate economies of scale. Outsourcing this aspect gives a company the ability to get access to skilled experts at a low rate.
4. Printing and mailing
Need to print off some physical newsletters or bills to send to your clients. Printing and mailing services such as Digital Print Management can handle this task for you.
Outsourcing this task involves emailing over the document you want to print – the company then prints the copies you want to send and puts them into envelopes before mailing them for you.
This could save you money on a printer and printing supplies, whilst also saving you time spent filling envelopes and going to a post box.
5. Knowledge Process
Yes, you can outsource data-driven knowledge activities. This is the process of gathering, managing, analyzing, and delivering objective insights into businesses. It is a subsection of the Business Process.
It addresses business problems across industries and domain to empower organizations with actionable insights through cutting edge data analytics.
The adoption of this kind of Outsourcing process may and may not generate so much profit but it will certainly help in value addition. It’s all about research and gathering information.
Examples are intellectual property, business and marketing research, legal services and research and development in fields such as pharmaceuticals and biotechnology.
Knowledge Process Outsourcing firms require more skilled personnel than Business Process Outsourcing service providers. 85 % of transnational companies today outsource their non-core activities, just to pay attention to their primary business.
6. Logistics and warehouse space
Need a warehouse for keeping your stock? You could outsource warehouse space, logistics and delivery using a company such as Ecoloads.
This could be perfect for e-commerce businesses that want to focus on the retail side. It could also be a lot cheaper than having to rent or buy warehouse space.
7. Software outsourcing
This is now the new normal. As a business owner, you can hire a third party Software contractor to do software-related work that could have done in-house. This is recommended because you will need a great deal of money and time developing a complete software application.
Software developers provide businesses with a competitive advantage at a minimized cost, which helps you to achieve low cost and an increased level of production. Also, it enhances customers’ services and maintains product quality on a limited budget
8. Your company address
Work from home, but don’t want to give out your personal address to clients? Outsourcing a new company address could be the solution.
There are services out there such as Velocity Virtual that can allow you to rent out their mailing address – all your mail is then sent to this company before being forwarded to you.
Such addresses tend to be located in prestigious areas, helping your company to look bigger and better.
Strategies for developing a long-lasting relationship with your outsourcing partner(s)
This is one of the vital attributes to possess at the workplace in order to make the work go smoothly.
There should be regular meetings whereby, everyone comes together to discuss on the loopholes, success and outstanding needs.
You should also use modern technology such as emails, social media platforms to disseminate information too.
2. Motivation of employees
This can be done by actual awards, incentives or appreciation and respect towards the contributors.
3. Explicit about roles
You should ensure that every employee or partner working alongside your company understands specific roles and responsibilities. Also, be aware of how their performance will affect the success of their work.
Know These before Engaging an Outsourcing Partner (Caution)
1. Rules are rules
This section of the outsourcing partnership must be taken into consideration because these are the people you are handing some important company data to.
You don’t want a situation of negligence and mistakes, hence, your partner (s) must be loyal and must abide by the organizational guidelines.
2. Security Policy
You should have a strong and rational security policy for back up. This takes care of data classification. Develop clear policies to set up guidelines and standard for the work process and data security with your outsourcing partner(s).
3. Protection of Data
Before involving an outsourcing service provider, you should develop techniques to monitor your database. Have an application that will protect your data from being tempered. A device such as a firewall can be used to protect your data.
Before outsourcing the work to an employee, ensure the people you want to outsource are knowledgeable and familiar with the techniques and applications regarding how to protect and handle sensitive data.
There should be regular training from time to time. It is also important that they are updated with the latest security and privacy tools.
5. A skilful and passionate workforce
If you are outsourcing an independent entity, you should take into consideration the ability and goal of the person to ensure it aligns with your company’s mission and vision. In the first place, such a person is employed to utilize the opportunity to leverage his skills in an optimal way.
So basically, outsourcing services help you to transfer your business functions or some of the activities to an external service provider. This provider will be responsible for activities that could be done internally.
It’s a way of relieving staff from the workload. Working under pressure is not ideal as it can reduce speed and effectiveness at work.
Aside from outsourcing to an experienced person, you will always save money against hiring locally. However, it is important you take into consideration the level of experience and skills possessed by the company or individual.
As an employer, it is important to subsequently analyze your success progression so you know what next to do. While working, always ask yourself questions like;
- “Are the available resources utilized to the fullest efficiency?’’
- “Are we working with the best possible favourable cost?”
- “Do we have the professional expertise to deliver efficient work?”
- “How can I cut down recruitment and training costs?”
All these help you monitor the company’s progress.
Which of these tips do you find most useful and applicable to you?