When Should You Outsource? 5 Things To Consider

Outsourcing has been on the rise in recent years. According to an IBISWorld industry report, the demand for outsourcing services has grown in the last five years. While IBISWorld estimates the current market at $135 billion, market research firm Global Industry Analysts predicts that outsourcing will become a $262 billion market by 2022.

There are lots of contributing factors driving the growth of outsourcing, but perhaps the biggest driver among enterprises is the need to free up internal resources and focus on revenue-generating activities. In this way, outsourcing enables companies to concentrate on their strengths and reduce overall costs, while improving the quality of their products or services. For instance, unless you’re the Post Office, UPS or FedEx, your company probably doesn’t specialize in sorting and delivering mail or packages. Outsourcing non-core business functions like mail, security and facilities management can enable improved business efficiency and work-flow by letting companies focus on growth and innovation.

If you’re not sure you should outsource something, ask yourself: Is this a core competency, revenue-generating activity? If the answer is no, you might consider outsourcing that activity. Here are some things to think about when deciding whether or not it’s time to outsource roles or departments within your organization.

1. Focus on strengths.

The first step is to consider what your company’s core business development drivers are. The likelihood is that there is a host of activities that contribute to the organization’s ability to function but have nothing to do with fueling business growth. While keeping a clean bathroom or break room, and maintaining a productive mailroom might be essential to keep enterprises running, outsourcing these areas will improve efficiencies and allow the company to concentrate on what it does best.

2. Control costs and ensure backfill.

In addition to saving on overall labor costs, outsourcing can reduce costs associated with recruiting, hiring, training and incentivizing employees. And if you are outsourcing, then finding a replacement for that employee who is going on vacation or medical leave is something you don’t have to worry about as outsourcing companies will backfill the position.

3. Counteract high turnover.

With unemployment hovering just above four percent, the market favors job seekers. Consequently, more options for employees means higher turnover for companies, along with the associated challenges of continuously recruiting, hiring and training new employees. What’s more, outsourcing companies also provide a career path for onsite outsourced employees, providing businesses with experienced workers with a firm understanding of industry best practices. Where companies might struggle to find the right candidates for high-turnover roles, outsourcing firms have a pipeline of qualified and cross-trained candidates, ready to be placed as needed.

4. Flexibility and expertise.

Outsourcing highly specialized roles such as IT services provides companies with access to world-class capabilities and expertise. Additionally, bringing in subject-matter experts helps enterprises adopt and implement new technologies, while also allowing businesses to take advantage of the processes and infrastructure already established by outsourcing firms.

5. Improve quality of service.

Onsite outsourcing companies provide a service level agreement that outlines exactly what will be expected of outsourced employees. Not only do these agreements create accountability for onsite outsourced employees, in many cases, it also sets a higher standard than expected of regular employees. The net result is a higher quality of service overall.

There are many benefits to outsourcing, perhaps most important is empowering enterprises to free up resources and become laser-focused on their strengths. Outsourcing companies help businesses fill open positions with qualified candidates, and reduce the pressure of filling positions when people leave jobs unexpectedly or go on vacation. Outsourcing companies even provide career progression paths and accountability, which encourages growth, performance, and engagement among onsite outsourced employees. Ultimately, the most important thing to consider is how will outsourcing enable your organization to better serve your customers.

 

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