The practice of outsourcing is not new. But, these days it has become more mainstream.
Outsourcing means contracting an individual or an organization, outside of your employment, to carry out several processes for your business.
When carried out appropriately, outsourcing can be very useful for your company because it helps decrease the cost of production, and provides the owner with more time to focus on the core products of the business. There are outsourcing services that are offering every kind of services to start-ups as well as perfectly established businesses.
Most people know about outsourcing, but there are a few facts about this phenomenon that most people are unaware. Let us discuss five of those facts for the benefit of the reader.
1) By Outsourcing You Can Focus on Your Core Business
When the company is in a growing phase, its back-office operations are expanding proportionately. This back office expansion slowly consumes your resources both in terms of finance and human capital.
Eventually, these back-office activities begin to hinder your core operations because most of the employees are busy completing paperwork and other such things. Your core activities take a back seat.
When you outsource these activities, you and your team can have the time and the independence to keep yourself focused on the core business functions because eventually, they will increase your company’s profits.
It is not necessary to outsource all the work to outsiders; you can also only outsource some of the back office activities while assigning the rest to your staff.
The idea is to free up your own time, and that of your teammates so that you can all concentrate on running the business and expanding it.
2) Outsourcing is Cost-Effective
Sometimes, you may not find it highly cost-effective to carry out the back-office expansion. When your business is growing, you need to hire more office staff, complete more paperwork, and also consume more utilities in your office. These are all costly and increase your operating expenses.
In such a situation, you can keep your cost in check by outsourcing some of the simple operations of your business that do not require technical expertise.
Telemarketing, data entry and all such jobs that can be carried out by people outside of your organization, should be outsourced; This will also save your own office space.
Moreover, these jobs are not part of your core business operations, and it will not be risky in any manner if you are doing these jobs at a location other than your own office.
You will get a lot more work done in this manner at a fraction of the cost. You will also save yourself from the hassle of managing a lot of people within your office premises.
3) Outsourcing Promotes Smart and Efficient Work
Outsourcing is a great option if the back-office functions of your business are very complex. If you try to carry out these functions in-house, you will be required to hire skilled staff; This will increase your cost, and also occupy your office space. Moreover, the overheads of your business may also increase with this setup.
This extra work will impair the efficiency of your core business operations. Your best option in such a scenario is to arouse all those works that you can more out of your office premises.
Take, for example, a case where a company is required to buy goods and supplies from many firms and needs to make payments after each quarter.
Hiring an exclusive person for this very purpose will not be advisable because then you will be repeating this exercise every quarter.
Good things will be to outsource this entire function to a third party that will not only keep track of different suppliers’ accounts but also preparing to work for their credit amounts after every quarter.
4) Outsourcing Allows Retaining control of Support Functions
Outsourcing can control the operational costs of functions. These functions may belong to the group that has been running for long unchecked, Overtime, they become stagnant and would take a lot of time and effort to get back in tune. Outsource such functions to specialized companies that will manage these functions in a much efficient manner.
Take, for example, the IT department of your organization. It may be staffing more people than needed. Moreover, being a support function, they have a very little contribution to your core business operation. Over time, the IT department starts incurring high costs with very little contribution to the company’s ROI.
The management can get back control of its IT department through this agreement, and compel the contractor to carry out its request on a priority basis; This will essentially bring back control of this department to the management.
5) Outsourcing offers Hedge against High employee Turnover
When there is a high employee turnover within your company, it will often result in functional inconsistencies.
With outsourcing, you will be able to offer some consistency to the company. It will also reduce the risk emanating from a function that is showing low levels of performance.
If the manager of your finance department is on leave and his assistants are looking for another job; This will culminate in a high level of uncertainty not only within the department but also with all the other employees associated with the Finance department. When you outsource your finance department, you are sure that it will continue to function properly; This will reduce the risk arising from the unavailability of the finance manager.
6) Outsourcing allows keeping up with seasonal staffing demands
There are some functions in an organization that are seasonal. When there are high seasons, you need more staff to cope with the increased demand. When the season is low, you may not need so many people.
When you are outsourcing such functions, you can release them during low seasons, and re-hire them when you need.
For example, your accounts department may be extremely occupied during the taxations period, but very relaxed during the rest of the months. You can outsource this function and make sure that you only pay them when there is high seasonal work
The Final Word
There are some facts about outsourcing that are lesser-known among people. However, people are slowly coming to understand that outsourcing is a great option when it comes to running your business functions with efficiency.
There is also an option available to work with a single outsourcing company or hire more than one companies for carrying out different functions.
As soon as you fulfill your requirements, you may choose an option that suits your requirements at any given time.