There are a few companies that function completely independently. However, most others form partnerships with contractors as well as suppliers. Working with outside contractors is known as outsourcing and can allow companies to conduct their businesses more effectively and efficiently. However, knowing when and how to outsource is tougher than it looks.
In most cases, companies outsource in any one of two ways – either they outsource a single component of their day-to-day operations or outsourcing becomes a strategic part of their business. For instance, Apple follows the latter type of outsourcing where the company will internally design the products, and the contractors will operate the manufacturing and supply chain.
In this article, we will talk about some various strategies that you can place for outsourcing work and can also help you accelerate growth.
What Is Outsourcing? What Are Its Benefits?
Before getting into some tips for improving outsourcing strategies, let us learn about its basics. Outsourcing can be described as a business practice where job functions and/or services are farmed out to third parties. In the IT field, companies may outsource various types of IT-related functions like QA testing, software development, network services, disaster recovery, etc.
When it comes to outsourcing, companies have three choices; they can either outsource their services onshore (within the resident country), nearshore (neighboring countries within the same time zone), or offshore (distant countries). In most cases, companies often opt for offshore and/or nearshore outsourcing.
Some major benefits of outsourcing include:
One of the most important advantages of outsourcing is lowering the cost. When you employ your company’s employees for tasks that can easily be outsourced, you will have to increase their payrolls that may not add to productivity. However, once the task gets outsourced, you can redirect the efforts of your employees to something more productive, which will lower the overall costs.
Focus On The Right Things
As any company grows, they start to lose focus on what they are supposed to do. Focusing on the core components of your company will ensure that you always have the edge over your competitors. If you can outsource menial yet important tasks, you will be able to focus on more urgent things like increasing revenue gains, etc.
Strategic outsourcing may also end up providing you with a more knowledgeable workforce. It is always important to keep educating your workforce. Hence, do not place them on work that does nothing to grow their talents; instead, look for third parties to redirect the second-hand or menial tasks. Make use of the added time to provide education to your employees.
What Are Some Effective Strategies For Outsourcing Work To Accelerate Growth?
Some important strategies that you can use for outsourcing work to accelerate growth include:
Outline Your Outsourcing Goals
If you want to stay a step ahead of your competition, you need to start by defining your outsourcing goals. If you outline your outsourcing objectives, you will be able to select the right staff for your particular industry. This is because you will better understand the pros and cons of outsourcing a particular third party.
By establishing your outsourcing goals, you will be able to use the staff in the best and most effective manner. Apart from saving money, you will also increase productivity. You will also be able to scale the supplementary staff based on what your business requires.
Prepare Your Budget For The Unexpected
According to research, it has been found that IT outsourcing has hit $62 in 2018; on the other hand, BPOs have reached nearly $24 billion. The size of the IT outsourcing market will likely keep changing due to the fluctuating global economy since companies are using cloud computing environments for less critical IT services.
However, operational managers will still have to consider all business scenarios that often accompany a staff augmentation model. Therefore, you will have to consider the current staff augmentation needs while mapping budgets. You will also have to understand how such augmentations can reduce the overall personnel budgets.
Use The Right Outsourcing Engagement Model
you need to prioritize specialized skills when building an outsourcing strategy. Suppose you can define the creative or technical expertise you are looking for. In that case, the managerial teams will select an outsourcing engagement model that will match the required type of staffing.
Of course, there are various types of outsourcing mentioned above; all these types will have different risks and benefits. By choosing the right technical staffing firm, companies will put the workers to work more efficiently and quickly, without wasting resources or time.
Outsourcing Risk Mitigation
While outsourcing does offer many benefits, there are certain risks that you cannot ignore. If you can mitigate or eliminate these risks, you can reduce financial exposure; additionally, you will also increase the efficiency of your outsourcing model.
For instance, let us take quality issues as one of the many risks. These risks can be managed and reduced simply by working with third parties that have shown promise and commitment to providing quality control to their previous projects and clients. Apart from quality control, some other risk factors include control and trust, hidden costs, and confidentiality.
Establishing Strong Communication Channels And Relationship
One of the most obvious tips for a successful outsourcing integration is finding the right type of staff to understand the company’s way of conducting business. Of course, communication protocols and corporate culture may vary extensively from one business to another. If the work is done responsively and transparently, it will address any issues that may occur professionally and promptly.
As a company, you need to layout a well-defined blueprint of what you are expecting from the outsourcing company. You also need to be aware of the benefits and risks that come with staff and outsourcing augmentation. This way, you will be able to optimize the advantages and also minimize any associated risks.
Accelerate Growth By Using Powerful Software
Outsourcing is 50% technology, 50% management. You can use a cloud-based benchmarking, HR analytics, and recruiting tool that has been developed for HR departments and recruiting agencies. We’re mentioning such software because it features various predictive analytics tools that can help determine whether a current employee may switch jobs for an open role in another company.
You can also use such a tool to determine various other factors like recruiter efficiency, time to fill, cost per hire, and turnover rate. One of the best aspects is that it can be used to track the recruitment trends of rival brands so that you have comparison data.
SignalHire is our example—it will also collect data about the candidates via public networks like job boards, etc.; the profiles can also be inserted manually from platforms like LinkedIn. This special search tool that can help in outsourcing is quite advanced and fitted with various filters.
Most businesses often look at outsourcing as a method of lowering expenses; however, it can do so much more than just lower costs. As your business keeps growing, outsourcing will provide you access to new skill sets, disrupt your industry, and promote innovation. When you are trying to understand how outsourcing works, you need to look at the cost of hiring. Outsourcing can help you grow above your competition.