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Why more and more companies are outsourcing

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As the world of work continues to evolve, so does the hiring process. The first myth about outsourcing is that it’s new. Outsourcing (not a recent phenomenon) has definitely gained momentum over the last few months. The second (also quite popular) myth about outsourcing is that companies fire domestic employees and outsource their tasks to remote contractors overseas for cheaper pay. Although this happens, it’s an extreme case of outsourcing and not the full picture. So what is outsourcing and why are more and more companies including outsourcing as part of their hiring strategy?

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Image by Sincerely Media on Unsplash

What is outsourcing?

Outsourcing is when a company opts to have certain activities handled by an external resource rather than internally. An employer deciding to outsource certain elements of the business may choose contractors to perform separate functions or take over the work previously done by employees. Over the past decade, outsourcing has become a growing trend in human resources. Instead of having the traditional structure of maintaining and performing all job functions internally, more and more companies are expanding their horizons outside of the organisations to find the best talent for the job.

Outsourcing has also been a great way to elevate efficiency while restraining payroll and overhead costs.  However, it’s important to note that this doesn’t always mean employees will lose their jobs. In some cases, the outsourcing could just be transferring employees from the company’s original payroll to an outsourcing company that will handle payroll taxes, benefits, and other issues instead of the employer. This doesn’t always mean the daily tasks of the employees will be interrupted, sometimes it’s just y having their salary/wages being paid out from a different entity.

Making outsourcing work

Although outsourcing has become increasingly popular over the years, there are critical elements of the process that need to be adhered to for it to work as intended. For starters, there needs to be a clear vision of the direction the company is taking and how outsourcing certain elements of the business can contribute towards that.

Setting clear objectives

Strategic objectives need to be clearly defined by senior management, bearing in mind the goals of the organisation, to ensure successful outsourcing that does not run dry over time. Additionally, employers need to be part of the process and be engaged as much as possible in all contractual work.

Clear communication

Clear and consistent communication is crucial to successfully manage an external employee. Just as it is important to ensure internal employees understand and are aligned to the business objectives, external contractors need to be on board with the same objectives. Open communication is the best way to achieve this, creating a healthy working relationship will only work if the contractor and employer can clearly communicate with each other about work, changes in the organisation, or any other critical information that may impact output. In a nutshell, communication channels need to be open between all parties.

Building healthy working relationships

In addition to communication, relationship management plays an important part in maintaining a good working relationship between the company and the contractors. It’s important to ensure that the person managing the contractors keeps a healthy relationship, although your contractor is external, they are still just as important as internal employees and should be treated as such.

So why do companies outsource?

With all the work that goes into outsourcing, why are more and more companies taking this route? From a higher level, it’s simple: lower overhead and operational costs are always welcome. Hiring contractual workers is usually cheaper as they work remotely using personal equipment, relieving employers of all associated costs. Contract workers such as virtual assistants are also ideal, especially for start-ups as employers only pay for the number of hours worked.

Access to a wider talent pool 

Outsourcing allows employers to extend their reach into other pools of talent instead of relying on their employees only. Finding and retaining the best talent is at the heart of every successful business, and outsourcing allows employers to do just that.

Increased efficiency

Outsourcing more of the time-consuming administrative tasks can free up time for internal employees to focus on tasks that will have to the company’s bottom line. Outsourcing also helps businesses focus on building their brand and invest more time into higher value-adding services.

The benefit of a different timezone 

Employers with a global mindset benefit from outsourcing to contractors outside of their timezone. Standard 9-5 hours within the organisation’s timezone can limit its ability to tap into a wider audience as they cater to local customers only. Due to the different timezones, outsourcing can help strategically build a glocal business that’s able to interact with customers at various hours. This way you can maximise efficiency and build a competitive advantage.

Working around the clock 

An extension to the timezone benefit, companies who outsource to contractors across the world have the benefit of celebrating different holidays. A holiday in the employer’s country may not be observed by their contractor in another country. As such, employers who outsource internationally have the advantage of increased productivity even on local holidays without having to pay a higher holiday rate.

Should you consider outsourcing?

Although most of today’s companies outsource 70% to 80% of the content of their finished products and larger companies commonly outsource half of their IT operations, is it the right fit for your business? The reality is, there is no right or wrong answer, it’s all in knowing your business objectives well enough to figure out whether or not outsourcing is the right fit for you.

About the author:

Beren Saat is a content writer and digital strategist at Viralmich.

Her well-organized and analytical nature keeps projects running smoothly and makes her a vital component of our SEO team.

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