Why Should You Outsource?
Why Should You Outsource?
Although we are sure all of you are aware of the concept of ‘outsourcing,’ yet, for the sake of the uninitiated, let us quickly define the term for everyone’s understanding.
What Does Outsourcing Mean?
Outsourcing is a powerful and productive business strategy that involves contracting or engaging third-party service providers to handle an organization’s business processes. When implemented lawfully and effectively, it offers a host of benefits and enables businesses to reduce their costs and risks, and helps them adapt to the ever-so-dynamic market conditions and challenges.
Although the benefits of outsourcing have been well-established, recognized, and appreciated, and organizations have applied the concept since the early 2000s, it was only during the recent Covid-19 pandemic that outsourcing received a significant impetus to its status as a strategic business tool. It has become an invaluable and indispensable part of the leading businesses worldwide. Through this article, we will try to understand the top 5 reasons why organizations outsource or should outsource in case they are not. Let us begin.
Why Should You Outsource?
What was merely seen as a cost-saving strategy just a couple of decades ago has brought many benefits for businesses worldwide. Listed below are the top 5 benefits or reasons that reinforce the point why businesses should outsource.
Devoting precious time and resources to supplemental, unsubstantial, time-consuming, but important day-to-day tasks can be monotonous and divert an organization’s attention from its core competency. Outsourcing such processes and functions to a professional third-party service provider helps a business get the work done timely and efficiently and allows it to focus on its core competency and future business strategies.
Hiring and training employees are undoubtedly one of the most time-consuming and expensive processes for any organization. Once done, a business then assumes a fixed labor cost in salaries and benefits, even during periods when business is at its minimum. Outsourcing enables businesses to convert fixed labor costs into variable costs by paying only for the services required and received.
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Moreover, outsourcing allows businesses to save on operational costs like rent, office supplies, furniture & equipment, transportation, electricity & water bills, etc., that they otherwise would have had to spend had they hired an in-house team. Ultimately, the above result in substantial cost savings and increased ROI for an organization.
Hiring, training, and retaining the best talent from countries with high labor costs might be asking too much of most organizations, especially those just starting out. On the other hand, the inability to do so can severely hamper a business’s growth potential, especially during boom times.
Outsourcing provides businesses access to the best global professionals with diverse backgrounds and varied skill sets who can execute quality tasks in a timely and cost-effective manner. Moreover, even if an existing outsourcing contract is canceled, businesses can rest assured that their growth will not suffer as they will not have to put their core internal staff out of work.
Not only do businesses face dynamic external market conditions but also internal contingencies. Issues like high absenteeism & attrition, equipment malfunction, increased workload, etc., can severely impact productivity, project turnaround times, time-to-market, customer satisfaction, and other critical parameters. Outsourcing to countries with a time zone difference allows organizations to effectively run a 24/7 business, reduce and eliminate the issues mentioned above, and build a substantial competitive advantage.
With the ever-changing government rules and regulations, especially around privacy and data security, even the best global organizations can face the heat of operational and financial consequences in case of non-compliance. Even worse, they are more likely to come under the scanner quickly if they recruit untrained and inexperienced employees. Outsourcing operations to an experienced and compliant third-party service provider with trained staff can go a long way in safeguarding organizations against any potential lawsuits and penalties resulting from non-compliance.
Parting Thoughts
Markets today are not confined to the geographical boundaries of any country alone, so why should the workplace be? With modern communication software, cloud computing workflow boards, and state-of-the-art technology, outsourcing allows organizations to keep track of their operations in real time.
It has been proven, irrespective of whether large or small scale, that businesses that embraced outsourcing with open arms, especially during the pandemic, flourished more than those who shied away from it. A win-win situation, isn’t it? With more businesses looking to upscale on a global platform today, outsourcing has assumed even more significance than ever before. It is high time that more and more organizations start employing outsourcing as a strategic business decision to avoid being left out in the competitive race.