Why Do Companies Choose to Outsource Work?

Businesses of all shapes and sizes outsource work all the time. If you buy your paper for your printers from a supplier instead of chopping down and pulping the trees yourself, you are already outsourcing work. In this case, outsourcing allows you to engage the expert services of a company that focuses on creating paper, allowing you to not worry about the skills needed for that job. You can continue to focus on your business's products or services and trust that the paper supplied will be good quality and arrive on time.

Of course, this is a very indirect form of outsourcing. You probably don't know the person who fells the trees for your paper, but some outsourcing forms are much more intricately linked to your business. Outsourcing occurs whenever you sub-contract some part of your work to a third-party supplier.

Another example may be engaging a PR company to handle press inquiries regarding a product launch or a media campaign. In this case, you are giving another company control over part of your business strategy, trusting that they can execute the task with better expertise or at a cheaper cost than your company could do on its own.

Why Should You Outsource?

There are many benefits to outsourcing work, and they will depend on the type of work you are outsourcing, the scale of the work, and the duration of any contract. Some of the most common benefits are listed below:

● It can save you money. Due to the economies of scale, it may be cheaper to outsource certain parts of your business. For example, it may be cheaper to hire a cleaning company who frequently comes to your premises. As they are cleaning many properties, they can purchase cleaning supplies in bulk, where you might not be capable of orders of that magnitude. Similarly, it may be cost-effective to hire agency staff at busy periods rather than spending time (which equates to money through your employee's salaries) on constant recruitment.

● More time to focus on core business activity. If you have employed a salesperson who has an excellent rapport with your customers, you want to utilize that to the maximum. You do not want that employee's time to be taken up trying to fix a printer or reconnecting the WiFi. THEREFORE, outsourcing IT services could help your employees focus on their primary tasks and harness their skills to increase profitability.

● It can help your budget. Sticking with the example of IT services, this can be calculated easily as a monthly outgoing cost. If a computer or printer breaks down unexpectedly, it does not affect your bottom line as the cost has already been accounted for. However, if you do not pay for IT support, those unexpected costs could make your budget harder to predict.

● It can increase your customer reach. If you sell online, then outsourcing your delivery to a logistics company could mean you can expand sales to cover an entire region, country, or even globally. Delivery to this level may not be possible with your own logistics capacity. ● It can harness expertise for competitive advantage. Your company may infrequently require skills or knowledge that are not usually required. For instance, if you are launching a product, you may hire an events management company. Their expertise will ensure your product launch looks highly professional, and the event is managed smoothly. As they deal with the events industry daily, they would easily acquire theatrical lighting, staging, microphones, and AV equipment. Suppose your company was to organize this without this expertise. In that case, it might take many hours to find the right hire companies, negotiate a price, and figure out timings for the event preparation. Therefore, the events company helps you look professional and does not add additional stress to your employees.

● You can quickly adapt. If your factory has seasonal surges, then hiring agency staff could allow you to recruit quickly and not bog you down in employment contracts. It also allows you to respond if you get an unexpectedly large order by allowing you to increase and decrease working capacity as needed quickly.

Outsourcing your work does have a small amount of risk as you are expecting another service provider to deliver your customer care to the standards you expect. For instance, if you are a flower shop and your courier does not take good care of your flowers, you may lose your customers if the deliveries arrive damaged or in an untimely fashion. Therefore, it is always advisable that outsourcing is done with carefully negotiated contracts, and the level of service expected is laid out clearly for both parties.