What Is Outsourcing?

You’ve no doubt heard the phrase “good help is hard to find”. There’s a reason this adage has stuck in the public consciousness for so long: because it’s true. With today’s ever-increasing competition, it’s difficult to find the best in-house help.

Whether it’s because of budgeting issues, limited hiring capabilities, or restricted staff allotments, there are numerous reasons your business might turn to outsourcing. While in-house staff may be hard to hire and retain, outsourced services can tremendously speed up your business’s workflow. Here’s why.

Defining outsourcing

At its core, outsourcing is the process of obtaining goods and services from external suppliers. There’s a common conception that outsourcing strictly refers to foreign entities. While that’s certainly an option, outsourcing doesn’t exclusively deal with companies in other countries. In fact, if you rely on contractors and freelancers to take care of some of your business needs, that qualifies as outsourcing too.

For some companies, they’re unable to find the right internal hires to fulfill their precise needs. This could be because they do business in a specialized niche market, a smaller market with a diminished talent pool, or an oversaturated market with high demand. Other companies use outsourcing as a way to shift regulatory requirements, financial or legal liabilities, and other professional responsibility to a third party. More companies still are relying on outsourcing as a way of spurring industry innovation as these outsourced companies have to remain current and cutting edge to remain profitable.

Reasons for outsourcing

The most common services you may outsource are typically the ones you aren’t readily equipped to handle on your own. If you’re running a marketing agency, for example, you might consider outsourcing your IT needs until you’re able to hire an in-house tech member. Likewise, if you’re running an IT firm, you may outsource your marketing needs if you don’t have the know-how or means to spread the word about your business. For the longest time, outsourcing possessed a negative connotation. But lately, it’s an essential component of startup survival.

Outsourcing often abides by three tenets: being cheaper, being faster, and being better. For example, think of the average cost of hiring an internal accountant or payment specialist. Currently, Glassdoor estimates the national median salary to hover around $45,000. Compare that to how much it would cost to outsource payment processing. Chances are (and this could vary depending on the size of your business) the savings afforded by outsourcing are well worth the investment.

Choosing to outsource

The outsourcing trend is only projected to grow. More and more startups seem to crop up daily with goals of alleviating common pressure points for other businesses. The modern role of the consultant seems to be shifting to that of the outsourced company. While the allure of lower costs and increased business efficiency might seem like an immediate draw to you, keep in mind that not all companies are worth your time.

First, do your research. You can ask colleagues for referrals or do a simple Google search, but you should have at least cursory background information on a company before proceeding. Consider their industry reputation and ask for any case studies or examples of previous results as well. Finally, make sure everything is documented properly before signing any sort of contract or work agreement. The last thing you want is to hire a company and be stuck in a six month contract when it quickly becomes apparent that they’re not up to par.

Decisions, decisions

There’s no denying that outsourcing has an immense appeal. It’s a quick fix solution to a common business pressure point. After all, why wouldn’t you hire external help if you’re facing a dwindling talent pool and your search has dragged on? Outsourcing isn’t a decision to be made lightly, however. Give your decision the same weight and consideration that you would a new hire. You want them to be the right fit and vice versa. That way, you’ll be on the path to a successful business partnership.

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