Top 5 Reasons Why Companies Outsource: Benefits to Consider

The decision to outsource or keep work in-house has become a common dilemma for entrepreneurs and organizations worldwide. Whether you're already considering outsourcing or just learning about it for the first time, we're here to explore the benefits and drawbacks. This deep dive will help you make well-informed decisions that best suit your business needs.

What Is Outsourcing?

In case you’re not familiar with it, outsourcing refers to the practice of delegating work to an external third party who’s not part of your business. Such a third party can be a freelance individual, an agency, or another organization altogether.

Thanks to its multiple advantages, outsourcing has slowly positioned itself as the secret ingredient helping companies and entrepreneurs reach their business goals faster and cost-effectively. Just in 2015 alone, the global outsourcing market amounted to $88.9 billion dollars, according to Canadian ecommerce multinational Shopify.

For example: an accounting firm wants to create custom software that helps them capture leads, onboard clients, and automate their workflow. Instead of hiring a full-time developer to build this in-house, they choose to outsource the project to a more experienced software development agency with a track record of servicing corporate clients. This way, they get access to a whole team of experts they may not need to hire as employees right now, instead of committing to pay for an individual’s full-time salary.

With the remote work boom experienced in recent years, more and more individual entrepreneurs and full-fledged companies are choosing to outsource their work, to the point where it’s starting to become common practice.

5 Ways You Can Benefit From Outsourcing

As you may have figured, there are a plethora of reasons why you should outsource. Benefits range from freeing your time, to granting you access to better talent, to increasing your output’s quality and quantity altogether.

If you’re curious about the ways it impacts your business’ growth, here’s a list of the top 5 pros of outsourcing:

1. Work With Specialists Instead Of Generalists

Outsourcing opens the door for you to collaborate with individuals and teams who are specialists in specific fields, sectors, and disciplines. Working with specialists not only elevates the quality of your output. It also creates a more efficient work experience overall. After all, specialists hold advanced knowledge in their field and don’t require the training an employee/generalist would, as reiterated by American employment site Indeed.

Regardless of how big or small the task you need to outsource is, or how specific your needs are, there are specialists available across a myriad of industries that you can rely on, allowing you to focus on only hiring people that complement the core value driver of your business.

2. It’s Less Expensive Than Hiring Full-Time Employees

In most cases, outsourcing is cheaper than hiring a full-time employee, and a better investment overall. For starters, it saves you the time you’d normally spend screening hundreds of candidates, completing tedious paperwork, and in bureaucratic hiring procedures. In this case, you’re the one actively searching for specific experience (and a portfolio to prove it), intending to fulfill a concrete business need.

Another way in which deciding to outsource benefits your organization is in how less costly it is compared to hiring. When outsourcing, it’s normal to pay a seasonal amount or on a per-project basis. In some cases, the work you get in return may even surpass the quality of that done by a full-time employee. Simply put, you get more bang for your buck.

This way, you can go about your daily responsibilities with full peace of mind, knowing that…

• your work and your company’s reputation are in good hands
• you’re spending less while simultaneously producing more
• your overhead is not getting disproportionately large and you’re not breaking the bank

3. The Ability To Rely On Talent From All Over The World

When considering the pros of choosing to outsource, benefits extend well beyond your own country. Outsourcing allows you to think big, and one of its greatest advantages is how it unlocks the door to a global talent pool.

For once, you’re not limited by geographic location, the availability of local talent, and complicated immigration processes. Instead, you’re free to hunt for talent anywhere in the world, making the possibilities endless. What’s better, there are plenty of online tools to match you with the right candidates.

If that isn’t enough, you may even find great talent living in a country where the services you’re looking for are cheaper, once again showing how outsourcing is a feasible way to save money.

Lastly, working with people external to your organization, who also happen to live in a different culture, can bring in a fresh, unbiased perspective. Leverage this to bring innovation and spark creativity within your company.

4. Keeps Your Company Operating 24/7

Relying on global talent allows you to tap into remote workers and agencies that operate in different time zones than yours. This means that, by outsourcing strategically, you could keep your company operating 24/7, even while you sleep.

Outsourcing to people in different time zones is helpful to…

• increase productivity due to longer operating hours
• keep customer support open 24/7, leaving customers more satisfied
• give you a true sense of daily progress and something to look forward to every day when you wake up

You know what they say: money never sleeps.

5. Saves Time For You And Your Business

While working with freelancers and teams who don’t belong to your ranks may sound counterintuitive at first, it can save you heaps of time. By delegating work to well-versed specialists, you don’t have to spend money or time training and onboarding them. This alone saves you the risk of nurturing talent that may leave your company before seeing any return on your investment, as pointed out by freelance marketplace Upwork. In terms of outsourcing, benefits like these should be taken into account.

At the same time, independent collaborators and teams tend to be well prepared by having their own equipment ready, which allows them to kickstart a project as soon as you give them the green light. This grants you the ability to focus on what you excel at (and enjoy more) to keep your business growing at unprecedented speed.

Is Outsourcing For You?

Although everything may seem like unicorns and rainbows, there may also be cons to take into account when/if deciding to outsource. Benefits, however, do seem to outweigh whatever negative argument may be held against outsourcing.

Take it from millennials and Gen Z, who seem to prefer outsourcing along with all of its pros, as almost 50% of millennials and Gen Z professionals are more inclined to work freelance than in a fixed, full-time corporate position, according to German market and consumer data company Statista.

One thing is true: every company is different. Some may prefer to outsource their daily operations as much as they can, while others may just need the extra help sporadically. Use the aforementioned advantages as a reference and weigh them against your business’ long-term strategy to leverage this business trend to the best of your ability. You can always just start small to try and see what works for you best.

FAQs

Q1. What are the three pros of outsourcing?

The most obvious pros that come with outsourcing are the ability to work with world-class talent from all over the world, paying seasonally or per project, and the lower time and labor costs that come with outsourcing the work instead of hiring someone.

An additional advantage is being able to work with people in different time zones and keeping your business operating 24/7.

Q2. Do consumers benefit from outsourcing?

Outsourcing can be beneficial to consumers since the products and services they purchase tend to go up in quality as a consequence of being outsourced to specialists.

Since outsourcing can also keep a business operating for longer hours when leveraging different time zones, customers also obtain a faster response to their inquiries. Faster customer support results in increased customer satisfaction rates, creating a better experience.

Q3. What is the outcome of outsourcing?

Outsourcing brings positive long-term changes to the business world as a whole. For example, it allows new companies to grow in a lean way, without excessive overheads and allows them to do more with their limited capital. It also lowers the barriers to entry for new entrepreneurs and increases competition, which is good for global business.