Businesses are constantly looking for new and inventive ways to improve their business while still keeping costs low. Though there are many ways to lower labor costs and save money, one of the more prevalent strategies in the business world has been outsourcing. Beginning in the early 90s, the practice of outsourcing has been a go-to technique for many businesses trying to reduce costs, and for good reason!
Outsourcing is the concept of hiring a party outside of your company to provide goods or services that are traditionally handled by an in-house team. Some outsourcing examples include tasks such as digital marketing and website development, as these are jobs that can be handed off to experienced laborers in a particular niche (advertising and marketing) rather than trying to cover the work with your own employees.
One of the more prominent benefits of outsourcing is the amount of money and labor it can save a company. However, companies have started to turn to outsourcing for more than simple budget reductions in recent years. As outsourcing has worked its way into the everyday vocabulary of people in the business world, it has also been changing how businesses function.
Nowadays, rather than solely trying to reduce a budget, businesses use outsourcing to improve the company’s efficiency, manage employees and tasks, and remain competitive within their industries. It has become a multi-faceted tool that even small businesses can utilize to handle some of the many challenges of the modern business world.
This article will explore the pros and cons of outsourcing to guide you to becoming the best example of outsourcing in your industry. When used effectively, it can revolutionize your workplace, but there are some definite pitfalls that you’ll want to avoid. If you’re ready for it, let’s dive into the deep end of outsourcing!
What Can Outsourcing Do For You?
To effectively explain outsourcing and demonstrate its strengths and weaknesses, we’ll use an example of real-world outsourcing practices. As such, try to imagine you are the head of a mid-sized manufacturing business considering outsourcing some of its advertising responsibilities to a marketing agency.
This is an excellent example of effective outsourcing, as it takes a task (advertising) outside of the company’s “normal” capabilities (manufacturing) and assigns it to an outsourcing company that specializes in that task. Using this example, we can go over the three most beneficial results of properly done outsourcing.
Improve Efficiency
It can be reasonably easy to see how outsourcing saves a company money, but some people struggle to understand how it can improve a company’s efficiency in the process. Take our imagined manufacturing business, for example.
Before outsourcing their advertising responsibilities, those responsibilities were handled by employees. In many cases, these employees weren’t originally hired to do advertising and weren’t adequately trained in the nuances of the advertising industry. This removes productive employees from your original workforce, slowing down another department or process. Simultaneously, due to their inexperience, the employees working on advertising aren’t very effective, which may end up costing your business.
However, after outsourcing work to an advertising agency, our imagined company will likely see a rocket in productivity and efficiency. Experts who have the necessary knowledge and capabilities can now provide you with better advertising, and your employees can return to the work you hired them for. This brings us to the next benefit of outsourcing; a renewed focus on your core business activities.
Focus on Core Business Activities
When businesses outsource work, it undoubtedly saves the company lots of money, but it also saves lots of time. As a business owner, you’re probably used to juggling many different tasks at once, so you might not even realize how much time in a day is spent on non-business activities. This is especially true for businesses with full-time employees filling multiple team member roles.
For instance, it can seem like a tiny request to have an employee post something on the company website, but those small requests add up over time. Eventually, it gets to the point where productivity starts to slip, even with your company working the exact same hours. Outsourcing work alleviates the time crunch and frees your business team members to focus solely on business activities.
Stay Ahead Of The Curve
One of the most surprising advantages of outsourcing is the level of innovation and advancement it can bring to a company. In the past, outsourcing was viewed as the easiest way to find cheaper labor, but now, outsourcing allows businesses to specialize their service while the outsourcing partner company handles the non-essential business tasks.
If our hypothetical manufacturing business produces shoes, all of the business focus should be on making shoes, improving the shoe-making process, and learning about new and better practices. When tasks like human resources, accounting, customer support, and advertising are outsourced to other companies, it guarantees that your employees are working to grow your business. At the same time, the outsourced tasks are off your plate and in the hands of people who can expertly manage them, making your business that much more efficient.
Disadvantages of Outsourcing
As with anything, there are pros and cons of outsourcing. Though it can save plenty of time, money, and energy, there are still some challenges. For instance, communication can be an issue, mainly if you and your outsourcing partner are in different time zones. Though modern technology and the rise of video conferencing have made communication issues less of a concern, it can still factor into your outsourcing decision.
You also need to be careful with sensitive information when working with an outsourcing partner, just so there is no chance of liability or threats to your company’s security. On the whole, however, outsourcing can be an extremely effective tool to employ at your workplace!
Outsourcing Experts
Take it from us, outsourcing your work to the right company can change your business forever. We would know, as we’ve provided industry-leading janitorial and managed labor services for over 30 years! Our team members can help relieve you from the stress of cleaning or labor shortages, so you can get back to focusing on running your business.
Reach out today to learn more about a partnership with LACOSTA, or check out our blog for more business tips!