Outsourcing is a great way for businesses to focus on their core business functionalities and make sure that less crucial jobs get done. Thus, it is a cost-saving solution, which can increase the performance of your company. If outsourcing is managed and conducted well with a proper service agreement, a company from benefits from it and enjoys growth in revenue.
Are you contemplating outsourcing a single or multiple tasks or recruiting people on a permanent basis in-house? Outsourcing offers several advantages to businesses both for simple tasks and important projects. However, you need to first decide whether you really need an outside firm or contractor to do your tasks or not. From marketing to product development and sales, outsourcing offers a host of advantages.
There is no dispute over the increasing popularity of outsourcing and so it is the best time to learn about it. Before deciding on outsourcing, it is better to compare its merits and demerits. Additionally, it is also imperative to appreciate the effects of outsourcing on company culture.
Merits of Outsourcing
If you are aware of the merits of outsourcing, it will become easier for you to understand whether it would click for your business or not. Check out these top reasons to try it out:
1. There is no need to recruit more employees
If you outsource certain jobs, you can pay the contractor or service provider for their services. Thus, you are able to avoid full-time hiring of employees into your business. As a result, you can save a lot of money including their training costs.
2. Accessibility to a bigger pool of talents
While recruiting an employee, the company only has access to a local and small talent pool. It also signifies that the employer has to comprise. Several businesses have discovered that outsourcing offers them easy access to talents from different parts of the world. In case you require specialized support, it usually makes sense for expanding your search.
3. Reduced labor cost
In the United States alone, there are about 300,000 jobs outsourced every year. Each business has its own unique reason to prefer outsourcing and several of them are pursuing lower labor expenses. No one wants to trade quality just for the price. However, outsourcing frequently enables an owner to enjoy a win-win situation. It is simpler to come across the right talent at a reasonable price by searching a pool of global talent.
Demerits Of outsourcing
While outsourcing offers several benefits to the service providers, you need to also know about the potential limitations and so it is better to compare them against the merits.
1. Communication problems
It may not be that obvious but communication issues can be one of the most potential limitations. Check out many questions that are supposed to be asked:
- Does the service provider have access to a dependable internet connection?
- What is a contractor’s most preferred communication method? Is it telephone/mobile, email, or instant messaging
- What is the time zone of the contractor and does it match with the entrepreneur’s business hours?
Cameron Herold who is the founder of a training program for COO says communication is necessary to be successful in the world of business. At the same time, it becomes a major problem when one hires a service provider to outsource certain jobs. So, will it be a big factor when you want to outsource?
2. Quality related issues
Although outsourcing offers many benefits, it is only suitable when you get your expected quality. If the quality of the work is not up to your expectation, it can prove to be a great disappointment. It does not mean an entrepreneur cannot outsource specific tasks successfully. However, it is recommended to discuss the quality they expect upfront.
3. Inadequate control
While an entrepreneur provides instructions regarding what should be accomplished, they give up some kind of control by outsourcing. There are several reasons for this, such as a business frequently hires a contractor rather than an employee. Also, because a contractor does work full-time on a site, it may not be easy to have the same type of control the owner decides.
4. Effect on organization culture
As an entrepreneur, it is not difficult to focus on the potential advantages of outsourcing considering the effect it has on a business as a whole. In case you also plan to outsource, make sure to take certain steps to make sure it does not create a negative impact on your organization’s culture.
If there is a positive work culture, there is a higher productivity level. So, an entrepreneur should not do anything to jeopardize this. Outsourcing does not have a negative effect on the culture of a business. However, a business owner has to safeguard this before taking a call on outsourcing. It means discussing your decision with all such workers who should be affected.
As we saw, there are several pros and cons attached to outsourcing. You should consider them both while making your decision on outsourcing. It should not be taken lightly looking at the impact a wrong decision can take on your business. Also, consider whether you have any previous experience with outsourcing or not. Was it beneficial for your business or did more harm than good?
Companies irrespective of their size and type opt for outsourcing the business functions. They may opt for outsourcing a majority of their functions or just some of them to focus on their core business tasks.
We would recommend you to start with one or two small projects while hiring a service provider for the first time. It will help you to discover the style that the contractor follows, as well as, the workforce’s ability to finish the task within your desired time frame. For example, if you outsource your telephone answering, you should get a free trial for a telephone answering service to have a look-see at the services provided before you commit fo a long term contract.
An entrepreneur should also remember that it is always better to hire an outsourcing partner who has expertise with the most recent technologies and tools applicable for their area of operation. After all, your business should always be ahead of your rivals while hiring cost-effective and efficient services from the outsourcing partner.