5 Crucial Advantages of Outsourcing

One of the most challenging things for business owners, especially in newly founded companies, is opening the door to external help. After nurturing a startup through its early years, giving external parties access to your processes and inner workings can carry many fears and doubts into the equation. However, it can also create several key advantages for your business over your competition that are useful to consider.

#1 Focus on Core Tasks and End Micromanagement

As a company grows, it can be hard to notice the creep of activities that soak up the time of managers or employees. The back-office operations usually expand, and workers can lose time and morale as administrative demands grow. If employee resources are not being directed at their most beneficial tasks, this can slow down the efforts that made the business initially successful.

For managers, outsourcing can also help to avoid micromanagement where the leadership team is also being held up from non-productive matters that are not part of the big picture for the business.

#2 Lower Operating Costs

Human resources costs include the cost of hiring, which is elevated with executive searches. Onboarding staff takes up the time and resources of internal members, and then there are additional matters such as benefits and taxes. Working with contractors can minimize these expenses, allowing your business to get the same work done for less.

Outsourcing often increases profit margins by reducing the need for long-term salaries, and it can sometimes remove other costs entirely, such as expanding to a larger office or even renting an office in the first place.

#3 Promote Growth and Innovation

Sometimes it can be in a company’s best interests to consider the needs of clients rather than internal resources. By expanding a product offering, customers can have a moving choice, which contributes to retaining them for a longer period.

Businesses will often look at their in-house teams and align that with their product offerings, but they could benefit from considering maximizing their suite of products. If they need to bring in external workers to fulfill those offerings, then the price can be paid by higher ticket costs.

Companies can also tap into the creative ideas of outsourced workers and get some new ideas for innovation.

#4 Offer Staffing Flexibility and Train Internal Staff

Different companies can have different seasonality in their sales, making the cost-benefit of full-time staff harder to justify. The company’s efforts can be directed more efficiently by using outsourced workers.

External workers that visit your office can offer some training to your internal staff, or you could negotiate an opportunity for your staff to visit the third-party location.

This could be helpful for engineers or developers who can pick up new skills, work with different technologies, and get exposure to a different work culture. Those workers can come back with fresh ideas to improve in-house processes.

#5 Improved Business Processes for The Digital Age

Fully digitized operations, that are made possible through business-process management (BPM) create an opportunity for both service buyers and providers to leapfrog ahead by generating differentiated advantages in operations and significant bottom-line value.

Companies are increasingly looking for outsourced assistance with areas such as social media, automation, or cloud computing. The number of deals in those areas doubled over the five years from 2016 to 2020 and is taking more share from the traditional areas of call centers, back office, and procurement. This is in line with the growth in digital technology and the demand by customers to tap into those areas.

The Right Approach for Your Own Outsourcing Journey

A successful example of outsourcing is in the smartphone and computing giant Apple. The company is said to have around 200 suppliers but relies on a core of important manufacturers 98% of its production in order to deliver its iPhone and other product lines. By outsourcing its supply-chain and assembly operations, Apple can concentrate on designing the premium products it is famous for.

If you feel a bit uncomfortable with the idea of cross-border outsourcing, you could also benefit from looking for ways to embrace the project at home. The first suggested step for managers is to get the leadership on board with the benefits of outsourcing, as time and capital will be needed, and the longer-term benefits of the partnerships need to be highlighted.

From that point, it will then be important to consider the key chokepoints in your business and ensure that they operate smoothly and efficiently.

As a company grows, key talent can be assisted with extra pairs of hands, but a company can also expand its product lines or benefits with the resources of external companies. That can increase sales, but it can also help to breed innovation and a flexible approach to costs such as staffing, equipment, and business space, which will ultimately help the bottom line.