7 Best Examples of Outsourcing

When you outsource, you explore better talents outside your company, but not all outsourcing decisions lead to success. Many companies are stuck with deficient results, reworks, and delays because they outsourced.

The problem isn’t outsourcing. The issue is in finding the right freelancer or agency, which isn’t usually easy. With so many examples around—from outsourcing IT services to customer support or even accounting—knowing the best examples of outsourcing shows what works and what doesn’t.

In this guide, we shortlist the best types and examples, what to look for when outsourcing, and how to find the best outsourcing partners easily.

But before that, let’s see why outsourcing became popular.

Why Do Companies Outsource?

When done rightly, outsourcing saves your company money. Havard Business Review (HBR) estimates that companies cut expenses by 20% to 30% when outsourcing business processes such as payroll, recruitment, and lead generation. The International Organization for Standardization (ISO) also reports that companies achieve an average cost reduction of 15% through outsourcing.

Moreover, companies get to work with an expert in their specialty. Remember how challenging and expensive building an in-house team can be for a young company. Outsourcing opens you to a global talent pool of experts with good track records, regardless of the industry.

Types of Outsourcing

Offshoring

Offshoring involves outsourcing business processes or services to a distant country, often in a different time zone. A well-known example of offshoring is Apple’s outsourcing of its manufacturing to China, which benefits from lower labor costs and a reliable supply chain infrastructure.

Nearshoring

Nearshoring refers to outsourcing business processes to a neighboring country, usually within the same or similar time zone. Companies looking to balance cost savings with easier communication and cultural similarities often choose this model. For instance, many U.S. companies nearshore IT services to Mexico or Canada.

Onshoring

Onshoring, or domestic outsourcing, involves outsourcing processes within the same country. Companies that prioritize control, quality, and ease of communication usually prefer to onshore. For example, an SME might choose to onshore its customer service to another city within the same country to ensure consistent service quality and compliance with local regulations.

Multisourcing

Multisourcing is a hybrid approach where a company outsources different functions to multiple vendors across various locations. Businesses use this to combine the pros in offshoring, nearshoring, and onshoring for a tailored outsourcing strategy. A company might offshore its software development to India, nearshore its customer service to Mexico, and onshore its legal services within the United States

7 Best Examples of Outsourcing

What is an example of outsourcing? We share relevant case studies in different niches for most hihlights below. Take a look:

Best mobile app development outsourcing example

You might need specialized programming skills that your in-house teams are unfamiliar with. Wise, a notable brand, outsourced the building of its mobile application to Mooncascade (from the Pangea.ai platform) to address the hiring gap while establishing its in-house mobile development team.

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Partnering with Mooncascade helped the Wise team launch their idea quickly. Today, that outsourcing idea has become a globally recognized service, trusted and used by millions.

Best example of outsourcing in supply chain management

Logistics outsourcing helps companies improve supply chain efficiency, reduce delivery times, and manage transportation and warehousing operations without maintaining a large in-house team. For instance, Alibaba outsourced its logistics operations to Cainiao Network, a logistics company specializing in package delivery and warehouse management.

Alibaba leveraged the partnership to enhance service delivery and customer satisfaction.

Best example of an outsourced IT task

Information Technology (IT) services are one of the most commonly outsourced functions, ranging from software development to IT support and infrastructure management. You get to explore specialized IT skills that aren’t in-house, reduce costs, and scale operations efficiently when you outsource.

In 2016, Google outsourced its cloud services to Wipro, an India-based company, to manage its cloud infrastructure. Google’s partnership with Wipro eventually contributed to the efficient management and scaling of their cloud services. The outsourcing deal enabled Google to focus on core operations while ensuring high-quality service delivery.

Best example of customer support outsourcing

When your company experiences a spike in customer interactions, you want to outsource to maintain the service delivery quality that initially attracted them. Outsourcing is especially useful if you’re experiencing rapid growth or needing to provide 24/7 support across multiple time zones.

WhatsApp once outsourced its customer service operations to a team of Russian developers to maintain a lean internal team while ensuring that customer inquiries were handled efficiently. The result was a high customer satisfaction and support level that helped WhatsApp scale rapidly.

Accounting outsourcing

When it comes to bookkeeping, tax preparation, payroll processing, and audit, you want to improve accuracy, reduce costs, and ensure compliance with financial regulations. You can outsource to cut the costs of hiring and training in-house accountants.

Ask your financial institution to recommend a professional freelancer accountant, review online directories, or use the IRS directory to find professional tax preparers.

Things to Note While Choosing an Outsourcing Partner

Irrespective of company size, to ensure you outsource to the best, consider the following checklist:

1. Expertise and experience

Evaluate the partner's expertise in the specific services you need. Look for a strong track record in your industry or a similar domain. Ask for case studies, references, or client testimonials demonstrating their ability to deliver quality results.

Ensure they have experience handling projects of similar scope and complexity to yours.

2. Cultural fit and communication

Assess whether the potential partner aligns with your company culture and values. This includes their approach to work, communication style, and problem-solving methods. A good cultural fit can significantly improve collaboration and reduce misunderstandings.

Look for signs of flexibility, transparency, and a proactive communication approach. Regular updates and easy access to key team members are critical.

3. Technical capabilities and innovation

Ensure the outsourcing partner has up-to-date technical capabilities and uses the latest tools and technologies. Their tech stack should align with your needs and future scalability plans for IT, development, or technical projects.

Inquire about their processes for innovation and staying current with industry trends. This is crucial for businesses looking for a long-term partner who can adapt and grow with them.

4. Quality assurance and service level agreements (SLAs)

Review their quality assurance processes and how they handle issues or project delays. A strong outsourcing partner should offer clear SLAs that outline deliverables, timelines, quality standards, and penalties for non-compliance.

Make sure the SLA is comprehensive and includes performance metrics and accountability measures.

5. Financial stability and scalability

Assess the outsourcing company's financial health to ensure it can be a stable partner for the long term. Evaluate their capacity to scale resources up or down based on your project needs, which can be vital for startups and scale-ups experiencing rapid growth.

6. Data security and compliance

Ensure the outsourcing partner has reliable data security measures and complies with relevant regulations, such as GDPR or CCPA. This is essential for protecting sensitive information and maintaining trust with your customers.

Ask about their data protection policies, disaster recovery plans, and compliance certifications.

7. Cost and value proposition

Cost is significant but shouldn’t be the only consideration. Look at the partner's overall value, including their ability to deliver quality work, meet deadlines, and provide strategic input.

Be cautious of vendors offering the lowest prices but compromising quality or lacking a robust support system.

Pangea.ai Makes Outsourcing Processes Easier

Outsourcing work to a partner can make or break your company, but Pangea.ai resolves that.

Do you need help launching a new product, expanding your tech capabilities, or tackling specific projects like AI, Web3, or FinTech? Our network consists of prevetted developers and agencies.

Tell us what you need specifically in this brief, and we’ll match you with the best agencies within 72 hours.

Common FAQs

What is the most common type of outsourcing?

The most common type of outsourcing is IT outsourcing, where businesses delegate their IT services, such as software development, technical support, and infrastructure management, to external providers. This allows companies to access specialized skills, reduce costs, and focus on core business functions. Other frequently outsourced services include customer support, HR, and finance.

What are the five strategies of outsourcing?

The common outsourcing strategies are offshoring (outsourcing services to a distant country to reduce costs), nearshoring (outsourcing to neighboring countries for easier communication and cultural alignment), onshoring (outsourcing within the same country), and multisourcing (using multiple vendors for different functions).

How do you make outsourcing successful?

To make outsourcing successful, businesses should focus on selecting the right partner by evaluating their expertise, cultural fit, and track record; setting clear expectations and communication channels; drafting detailed contracts with well-defined SLAs; maintaining regular performance reviews; and fostering collaboration between in-house teams and outsourced partners to ensure alignment with business goals.

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