Is outsourcing really beneficial to a company’s successful journey?
This is a very important question that is frequently asked by both big corporate companies and upcoming startups! Outsourcing simply refers to the process of offering a company’s business process to a third party. Now this might seem absurd to those who want to do everything in-house and don’t want any external hands on deck. New startups who want to minimize their costs often try to do everything in hopes of providing end to end solution to their customers. And this is where most businesses go wrong.
There are multiple reasons why outsourcing is important, some of which are outlined below;
- Cost and efficiency savings
One of the most obvious and foremost reason is to save costs. If instead of recruiting and training people for logistics, you simply outsource the logistics services, you will end up saving huge costs over a period of time. And since the work is now being handled by people who are experts in that area, the work gets completed in a more effective and efficient way.
It is very important while outsourcing, to know the market trends and the abilities of the company to which it is being outsourced.
- Focusing on core competency
You might want to take a trip to the moon and dive into the sea along with watching TV in your home, but none of this can be done together. Similarly, and especially startups need to figure out their core strengths and work towards becoming the best in it. Instead of wasting their resources on trying to become the best at everything it is more feasible to become the best at one thing.
Outsourcing helps your company in focusing on more important tasks and at the same time pass on the mundane tasks to others.
- Better access to skilled workers
Globalization has made this world of ours into a very small place indeed. Internet and tele-communications have reduced the distance considerably and have helped form the new definition of communication.
Companies often face the issue of not having access to talented skill pool but with outsourcing, it has become much easier to hire the best.
Nowadays you don’t have to be physically present at the company headquarters to do your job. You can get it one from the four walls of your house from the other side of the earth.
- Reduced overhead cost
This is especially useful when it comes to payment of tax and revenue generation. Various countries across the world like Singapore, Hong Kong and Taiwan provide a much easier and flexible tax system for corporates. This encourages companies to outsource their workings to such places.
Collection of taxes at lower rates and cost of labor are some of the important criteria to look at before taking a call on outsourcing parts of your business!
- Freeing up of internal resources
When you go along with outsourcing, you are able to focus your resources and abilities into something that is more productive and helpful to the company.
Sharing of company processes has helped them in reinventing their business models and following a lean structure that helps in managing their bills. Capital and human resources are very important to a company and need to be effectively managed to grow the company. But if the company is busy learning everything, it will not have the resources to pursue its core value proposition.
- Mitigation of risk
Outsourcing certain tasks of the company allows it reduce the risk of elevated turnover rates. It is much easier and cheaper to correct mistakes and develop products when it is being handled by people who are good at it. Outsourcing provides the path for a more inexpensive and faster process for getting the task done.
They act as buffers when managing the risk associated with running and expanding the company.
- Help in expansion
History teaches us that through outsourcing it becomes easier for companies to venture into new market for their products and services. As the economy and purchasing power of the world develops, companies continue to find new markets for themselves.
And one of the most effective ways to do so is through outsourcing. Due to outsourcing of IT jobs to India, the world found a major emerging market for various products and hence that led to further foreign investment and development of projects.
Over the long run, outsourcing brings a lot of pros with it when carefully used by the companies.