What Is Outsourcing And Why Consider It?

Feb, 2022

Outsourcing is a business practice in which specific tasks, operations, or jobs are given to a contracted third party to complete. This system is often called business process outsourcing (BPO). The contracted third-party, which is generally a company, arranges its own workers or hires new ones especially for you, its own software and computer systems, and manages them for you throughout the process of completion of the tasks you delegate.

Companies can outsource a wide variety of tasks or ever entire departments. For example, a business might outsource IT operations, human resource management, marketing, customer service, telesales, financial services, logistics and more, instead of completing these tasks in-house.When outsourcing, it’s important to remember that this is much more than just a service-level agreement, it’s a business partnership which needs a trusting relationship and establishment of good practices to succeed.

Why Outsource?

Outsourcing has repeatedly turned out to be the solution to various obstacles within companies. However, not all reasons to outsource have to be obstacles. There are a number of reasons for a company to outsource in today’s world:

Significant Cost Savings
With the globalisation of business and the rapid development of technology, there are multiple regions across the world offering highly skilled workforce at a significantly lower cost. That’s why many companies choose to outsource in order to reduce their operational and labour costs.Focus on growing your business

Through delegating various time-consuming tasks, companies free up time for their internal staff and management to focus on growing the business. Outsourcing is especially beneficial when demand is temporarily high, and the company can’t afford a long-term commitment.

Specialisation.
When outsourcing, companies open up to the possibility of hiring in different states or even continents. This eliminates geographical restrictions and allows companies to fish out of a global pool of talent and expertise, avoiding time-consuming trainings of new staff.

Logistical benefits.
Third parties which companies outsource to, are more often than not in a different time-zone. This allows for the business to operate with longer hours since the outsourced staff is on call when the local internal employees are not available.

Reduce risks.
Delegating difficult and sensitive tasks to an external provider allows for a company to waive some of the responsibility. This facilitates the company to reduce the risks of performing complex tasks while still enjoying the benefits of their completion.