Why Outsource: 6 Benefits of Outsourcing for Your Business
When faced with a project or task that’s outside your area of expertise, do you do it yourself or hire someone else?
If you’re like most business owners, you’re likely strapped for time and would choose the latter.
This is the concept of outsourcing. Outsourcing isn’t new, in fact companies like Google, Facebook, Wells Fargo, Nike, HP, IBM, American Express, and LinkedIn are just some of the top U.S. companies that have found it beneficial to outsource some of their operations.
What is outsourcing?
Outsourcing is the practice of contracting out certain business operations to a third-party service provider. It can be on a small scale, such as hiring an individual freelancer or agency to complete specific tasks, or a bigger one, like contracting out a company’s accounting or marketing operations to another company or agency.
6 reasons to outsource
Outsourcing can help businesses save money on operational expenses by shifting these costs onto an external party. For example, if your business needs web development services but doesn’t have the budget to hire a full-time developer, you can outsource this task to a freelancer or agency who will create and manage your website for you. This means you don’t have to invest in hiring an in-house team of developers or pay them a salary.
But this isn’t the only benefit. Below are some of the advantages or benefits that outsourcing can provide for your company.
Decreased costs is one of the major reasons companies outsource some or all of their business. Consider, for example, that 62% of companies save 10% to 25% while the remaining 38% enjoyed more than 40% savings through outsourcing (Deloitte, 2021).
Cost savings can be realized through reduced labor costs and lower overhead expenses. When companies outsource, they can often find qualified professionals who are willing to work for less than they would pay an in-house employee. And, since outsourced tasks are often performed offshore or in countries with lower labor costs, companies can save money on things like office rent, utilities, and other overhead expenses.
Increased focus on specialization and core competencies
By outsourcing non-core tasks, businesses can streamline their operations and optimize their resources.
When you outsource a task, you’re able to focus on what your company does best. You can focus on providing excellent products, services, and experiences to customers. For example, if you’re a food industry entrepreneur who works with farmers to bring their crops to market, it makes sense to outsource some tasks such as accounting or marketing so that your employees can spend more time directly working with farmers.
Increase productivity and efficiency
Outsourcing is a good option for companies looking to grow quickly and efficiently. This is because it lets you leverage the skills of people or companies that are more experienced with the tasks or objectives you’re trying to accomplish.
For instance, if you’re a business owner who needs help with your marketing, you can hire an experienced marketing expert to do the work for you. This allows your business to hit the ground running instead of trying to do things you don’t have enough expertise in. It also frees up your resources – including your staff and employees – for core company activities while allowing your company to grow those skills over time.
Access to a larger talent pool
One of the main benefits of outsourcing is that it gives you access to a larger talent pool. If you own a business and need to hire someone, there are probably certain skill sets that are difficult to find in your local area or field.
It could also be a good idea if they have experience in an industry that’s different from yours but still relevant. For example, if you run a technology company, it might not be easy to find someone with experience in marketing. However, if you use an outsourcing agency that specializes in digital marketing services, they’ll have access to a much larger pool of candidates who can fit the bill for your specific needs.
Enhanced flexibility in service delivery
Another benefit of outsourcing is the flexibility to meet the needs of your clients and customers. When you outsource, you can work with a variety of service providers to find the best fit for your needs. This flexibility allows you to tailor their services to meet specific requirements and deadlines.
Additionally, businesses can benefit from access to a wide range of services that may not be available in-house. This can allow businesses to expand their operations and offer more services to their clients. By outsourcing, businesses can improve their overall flexibility and meet the needs of their clients more effectively.
Finally, outsourcing can improve efficiency within a company. Bypassing the need to hire and train new employees can save time and money, and allow companies to focus on their core competencies. Additionally, offloading certain tasks to specialists can free up employees to work on more important projects.
These are the benefits of outsourcing that help business owners manage their daily operations and establish long-term growth for their company.
It is for these reasons that some of the most successful companies in the world are also leaders in outsourcing. Consider this list of companies that became successful as a result of outsourcing:
Dell is one of the most famous outsourcing companies. They are a computer manufacturer that has been outsourcing since it was founded in 1984. Dell outsources almost everything except their final assembly and customer support, allowing them to create more efficient and cost-effective technology products.
Microsoft is another company that outsources much of its production. Microsoft has been outsourcing since the early 1990s, when they started using contractors to build their software applications. They also outsource many of their hardware needs, including servers and computers.
Amazon also has a large supply chain, which includes many companies around the world. Amazon uses other companies and individuals to fulfill orders, ship products, provide customer service and manage their website. For example, they rely on third-party vendors to sell goods on Amazon Marketplace and for Fulfilled by Amazon (FBA) sellers who store their inventory in Amazon fulfillment centers.
Netflix has a large supply chain that uses third party companies to deliver their products. Netflix uses third-party vendors to provide streaming video, DVD and Blu-ray disc rentals, and customer service. They also have their own production studio with employees in Los Angeles who create original content for Netflix’s streaming service.
Apple is another company that outsources a lot of its operations. It has a cloud computing division that provides services to other companies and it also outsources its customer service department, which handles calls from users who don’t have Apple products but need help setting up Trackpads or making FaceTime video calls with iPhones.
Grow your business with outsourcing
Now you know why outsourcing is beneficial for business growth.
By outsourcing certain tasks and operational aspects, businesses can improve their overall performance and competitiveness. This is crucial when you’re a startup or looking to expand and scale your business.