Outsourcing is an incredibly powerful concept in today’s business world for many reasons. The idea of this business practice is contracting with an outside party to delegate specific tasks instead of hiring new employees or allocating those tasks to existing employees. It is an efficient and effective way for businesses to lower operational costs and modernize operations while still handling important functions.
How Company’s Efficiency Can Be Increased Through Outsourcing?
1.Focus on Main Activities
A company’s back-office operations tend to expand during periods of rapid growth. This expansion can result in your human and financial resources being tied to the core activities that made your company successful.
Outsourcing essential but routine tasks allow you to re-focus your internal resources on core activities that have the most value and make you profitable without sacrificing quality or service.
For example, imagine the company enters a large contract that can significantly increase purchasing volume in a short period. In this case, by delegating purchasing functions to outsource, you liberate personnel to focus on the contract itself.
2.Lower Costs
Business growth can result in prohibitive costs due to an increased need to purchase equipment or relocation. It will be more cost-effective to use outsourcing rather than expanding operations within the company in such cases. For example, outsourcing simple day-to-day operations such as telemarketing or data entry can cost much less than business expansion and be both efficient and less costly than relocation.
Outsourcing can also help minimize overall expenses by reducing recruitment costs, such as:
• Hiring search
• Onboarding/training
• Benefits and bonuses
• Payroll taxes
• Increased need for employees in managerial and HR positions
To sum up, working with contractors can decrease these costs, allowing your business to get the same number of tasks done for less.
3.Maintain Operational Control
Outsourcing operations at increasing costs can help you better maintain control of your operations. For example, departments that, over time, could become uncontrolled and poorly managed areas are good candidates.
Imagine your IT department is overwhelmed by too many projects, not enough people, and the budget far exceeds its contribution to your organization. An outsourcing agreement with an IT contractor will force management to prioritize their requests, regain control of projects and costs.
4.Develop Internal Staff
Large projects may require skills that your employees do not have. In this case, outsourcing to outside contractors (external outsourcing) can provide you with people who have the unique skill sets, knowledge
and experience you need, which in time will help you acquire a new set of skills from your employees.
So, suppose your company needs to upgrade custom-made equipment, but your engineers do not have the skills required to design new and upgraded equipment. If so, outsourcing the project and on-site outsourcing engineers allows your employees to learn from contractors while ensuring that the job is done with the skill and quality required.
5.Provide Continuity and Risk Management
All companies are vulnerable to events that could impact their reputation and performance.
During periods of high turnover, businesses can face uncertainty and inconsistency in their operations. The advantages of outsourcing are that it ensures the continuity of the company’s work while reducing possible risks from an inadequate level of work that can occur even within a short time.
For instance, the HR manager is absent due to illness, while a new administrative assistant leaves the company. In this case, the transfer of human resources to outsourcing reduces risks and allows the company to continue working in a usual manner while the employee is absent. Besides, it will enable you to hire a new assistant without rushing to make decisions because of a lack of staff.
Although outsourcing is often viewed solely from a cost-saving perspective, it should be considered that this practice has a much more comprehensive range of benefits beyond minimizing costs. As your business grows, outsourcing can be a supporting factor in driving innovation, revolutionising your industry, and acquiring valuable new skills that will change your company’s position in the market.
Thinking about how outsourcing can contribute to your business growth?
Try to not concentrate solely on looking at the cost of hiring external contractors. We recommend focusing on the value that the contractor’s experience and skills will add to your company. Whether through expanding manufacturing, extensive marketing, or disruptions in business practices, outsourcing can help make your business more flexible and agile, able to adapt to changing market conditions while providing an opportunity for innovation, growth, and, what is more, competitive advantage.
