updated - August 4, 2020 Tuesday EDT
In any business, people are the most valuable assets. They build brands, develop products, attract customers, manage, control, and still outperform smart machines in many tasks. When it comes to the workforce, there are two critical aspects associated with it: skills and costs. On the one hand, people add value to businesses by bringing their knowledge. On the other hand, they want to earn money. But what to do when expenses outweigh values?
One of the most viable solutions is outsourcing. It allows businesses to delegate specific tasks or processes to external employees. Hence, companies can find skilled experts somewhere outside to get the best skill/cost balance. This concept saves a lot of money that brands spend on offices, for instance. But it also requires careful analysis. Find the core benefits and disadvantages of outsourcing below to compare them and understand how things work.
Let's start with the basics. Outsourcing is a cooperation model between parties. In it, one company assigns specific internal processes to an external team or person. For instance, you can outsource PR activities by hiring a third-party advertising agency or find freelance developers to build a new website for your brand.
The list of activities for outsourcing differs. Each business should identify its cornerstone and side duties independently. Ideally, you want to delegate tasks to save time, cut costs, and get better quality. Often, only two of three points can be combined. While processes are different, we have a few examples of universal outsourcing activities:
* Customer support.
As well, there are cases in which outsourcing can't help. Industries with sensitive data like defense or public health should keep this information in-house. Don't outsource if you have to control everything, have a lot of established contacts with partners, or can get high internal quality without exceeding budgets.
Outsourcing focused on cost reduction and time savings. Here's the list of primary benefits enabled by this strategy:
* Access to a large talent pool. When a business isn't limited to the local labor market, it's much simpler to find the required qualifications. Virtually, the entire world is open, so that you can hire anybody from anywhere.
* Competitive edge. By working with several distributed teams and partners, you accumulate vast knowledge. Combined with other benefits, it can take your company to the next level, differentiate it from competitors.
* Focus on core points. This strategy is great when you want to get rid of mundane tasks. Data entry and validation, reporting, day planning - remote employees can handle these activities, letting your company care about more essential things.
* Reduced expenses. This point is definitive. When you work with remote employees, you don't have to spend on office things, benefits, relocation, etc. Often, outsourcing involves contractors with lower salary expectations than local workers.
* Round-the-clock work. Having a distributed team is convenient because you can build constantly-live processes. When employees in New York stop working, the European office launches, and then it passes tasks to freelancers in India.
* Flexible project management. Thanks to the rise of remote work, companies can now collaborate effectively. There are freelance services like UpWork, voice chats like Google Hangouts, and PM interfaces like Jira at your service.
Outsourcing also comes with several risks. The main one is poor control over delegated activities. Here are examples of outsourcing issues:
* Delays or failures. Often, it happens that hired teams or freelancers can't deliver the results on time. Moreover, some contractors may disappear, leaving you with an unfinished project. To avoid such issues, you should organize cooperation flawlessly.
* Dependence on contractors. Rarely, it happens that one provider becomes your only partner. For instance, if you use cloud services, you're dependent on Google, Amazon, or Microsoft. We suggest diversifying activities in this case.
* Lack of control. With remote teams, it becomes more challenging to manage them because you simply don't see them personally. However, it's better to avoid strict tracking. Instead, focus on the results and always agree on terms and goals with employees.
* Language barriers. English is a global language, but not all people know it well enough. If you want to avoid language-related issues, be sure to list English or your native language in the requirements to cooperate with relevant candidates only.
* Poor communication. This risk expands the previous one. Many misconceptions lead to delays in delivery, problems with quality, conflicts. Be sure that all parties are on the same page and have no misunderstandings at each moment of cooperation.
* Privacy and security concerns. Finally, as we mentioned earlier, it's better to keep sensitive data inside your company. Outsourcing related to intellectual property can be tricky. You should know the laws of different countries. Ideally, get a lawyer.
At this moment, you should realize that the mentioned issues aren't omnipresent. You may avoid all of them or face one or two, or move through all the existing problems. It depends on your company, specific projects, partners, and the strategy of cooperation. Outsourcing requires some managerial skills, surely, so don't hesitate to learn how to outsource properly.
At the end of the day, outsourcing is already deep in the global business culture. The world becomes more and more interconnected, and even the current pandemic crisis can't destroy these links. We move online, set remote connections, and cooperate with partners from different corners of our planet. And that's great.
Still, outsourcing isn't the universal tool, and you should realize this clearly. Like any other business strategy, it requires detailed analysis to show which processes can be outsourced by your team and which ones should remain internal. All brands are unique, so potential benefits and risks will be different, too.
Weigh all pros and cons, consult with your stakeholders, and then decide if you want to outsource something or no. Good luck!
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