Is Outsourcing the Right Solution for Your Business?
Outsourcing started in the 1950s, but it wasn’t until the late 1980s that it was recognized as an attractive business strategy. The industry has steadily gained popularity since then, and with the advancement in technology and connectivity, outsourcing is no longer an option only large companies can afford.
In the last decade, we’ve seen the rise in the popularity of freelancing platforms like Upwork (formerly oDesk) that allow businesses to hire remote workers from anywhere in the world. While we hear lots of positive experiences from both clients and freelancers, we’ve also heard “horror stories” here and there. If you are one of those clients who had a negative experience working with remote workers or if you’ve never tried outsourcing and are now considering it, I hope this article will help you evaluate whether outsourcing is the right solution for your business needs.
Let’s start with the top 5 reasons why companies outsource.
1. Cost savings
Cutting costs is undeniably the leading driver that compels many businesses to outsource. This is what Deloitte’s 2020 Global Outsourcing Survey seems to reveal as 70% says businesses started to refocus on the numbers after being convinced that cost reduction is the key reason for outsourcing especially in times of crisis. Many entrepreneurs who have gone to outsourcing companies in the Philippines even enjoy as much as 60% to 80% cut in their labor costs.
However, you must keep in mind that cheaper is not always better. Quality comes with a price. As the competition within the industry continues to grow, so does the gap in the pricing of services from one provider to another. If you are patient enough to search, do background checks and test candidates, surely you’ll find one that meets both your quality and budget requirements.
2. Work smart
Outsourcing allows organizations to focus on the critical business functions that enable them to grow their core competencies internally. How can a business maximize its working hours in a day? By working smart with the right priorities and proper delegation of tasks. Iterative tasks could lower the employees’ morale so they must be freed of it to handle more revenue-driving and strategic jobs that their qualifications were hired to do. Outsourcing comes in like a breath of fresh air when all the tedious and repetitive tasks necessary for the smooth operation of your business are taken off your shoulders.
3. Specialized talents worldwide
To commission work outside the company aimed at filling in the skills gap in your organization is one way to bring out the astute manager in you. With today’s technology, you have a vast array of talents worldwide to choose from at your fingertips. Take for example, the outsourcing companies in the Philippines which have specializations that are very much in demand in this age of eCommerce and digital revolution such as leads generation and database management, data entry, customer support, dropshipping, social media management, virtual assistance, orders fulfillment, SEO, graphic design, video production, and content creation. Other countries like India and Malaysia are outsourced for their specialization in finance and technical support. Even the business giants from various industries like American Express, Google, and MasterCard have turned to outsourcing overseas in the area of customer support.
4. Leave it to the experts
Most startups and small business owners tend to DIY everything. But this is counter-productive. With today’s technology, you can easily have access to professionals and experts in various fields of expertise. Hiring people who specialize in specific tasks like accounting, SEO, lead generation, data research, email automation, and response handling, content writing, social media management, and other administrative tasks saves you time and brings out better results.
5. Work-life Balance
Do you find yourself working more than 8 hours almost every single day? Outsourcing some of your repetitive day-to-day tasks will free you up of time so you can focus on tasks that require your expertise. You can eliminate the multiple tasks that seem to never end by commissioning a remote team to handle them for you on a part-time or full-time basis.
One of the misconceptions among startup entrepreneurs is that they need to work long hours and work hard to make their startup succeed. Rest and recreation seem to be a luxury most entrepreneurs cannot afford. However, it is important to remember that our body is designed to “re-charge” and regenerate through sleep, rest and recreation. Working long hours stalls your productivity and drains your mental and physical energy. Maintaining a well-balanced work-life is essential if you want to find joy and fulfillment in whatever you are trying to accomplish.
Now let’s look at the top 5 outsourcing challenges and what you can do to avoid them.
1. Accessibility Issues
Working in different time zones and the reliability of internet connections can be challenging both for you and your remote team. The inability to connect with your outsourcing partner right away when you need something urgent to be done can indeed be frustrating. But recruiting the right outsourcing partner who will work for you at your preferred time, invest in the latest technology, and have a stable internet connection isn’t far from reality. All these details must be laid out from the very start to avoid false expectations.
2. Language Barrier
Language plays a vital role in business. It is as necessary as the skills and expertise required from an entity or employee that can contribute to the success of a business. Plans cannot be articulated well and implemented and strategies won’t take off effectively if your team is lagging behind in good communication. In the outsourcing world, many nations that have the expertise and ability to accomplish the needs of a business fall below the expectations of employers due to communication challenges. First off, entrepreneurs acquired their outsourcing services to make the process of running their business easier and smoother. The last thing they would want to face is a language barrier that could pose misunderstandings, presumptions, assumptions, and costly mistakes about what they expect to be the outcome of the project.
English is the universal language and is spoken by 20% of the earth’s population. It is the most used language in the world in 2019 with 1.27 billion people speaking English either as a native speaker or as a second language according to Statista in its study. As the Harvard Review says in its May 2012 column entitled “ Global Business Speaks English” one in four use English at a useful level even if they are not native speakers in order to close a deal with another English-speaking counterpart and to generally facilitate performance and communication across various functions and business dealings.
Conducting face-to-face interviews will help you gauge the language proficiency level of the candidate. However, it is also important to note that fluency in speaking and having perfect grammar are not the only indicators of good communication skills. Comprehension and the ability to express oneself in a coherent manner are also important elements to consider. My college professor calls it “the ability to understand and be understood”.
3. Trust issues
Learning to give up your control or share confidential information takes a lot of trust on your part. Taking risks is part of doing business. Know how much risk you are able to take, what sort of information you can and cannot share and how much independence you expect and are willing to allow your remote worker especially in decision-making. If the task or project that you want to outsource requires a high level of security and accountability, doing a background check on the service provider’s reputation is well worth your time.
4. Cultural Differences
Companies that outsource their business processes often have to deal with both corporate and regional cultural differences. These impacts different aspects of the business and oftentimes, if not managed properly, may give rise to misunderstanding and friction between the two companies.
Outsourcing is a partnership and therefore it is important that both parties understand each other and intentionally make an effort in maintaining a healthy relationship in order to work together effectively.
5. Rising local unemployment
Despite the rising popularity of outsourcing, it is also getting a lot of criticism, especially in the US. Critics of outsourcing argue that it is the major cause of unemployment among Americans. They were mostly affected in 4 industries namely manufacturing, human resources, call centers, and technology. About 34% of American-held manufacturing jobs were lost to outsourcing from 1998 to 2010.
However, if the qualified unemployed Americans accept the jobs being outsourced at their standard rates, the consumers would suffer and will be forced to pay exorbitant prices of goods and services due to high labor costs which is a vicious cycle. Whether outsourcing is for the betterment or the degeneration of the nation’s economy depends on how people see it.
The list of challenges and benefits of outsourcing goes beyond these points I have covered in this article, but I hope it’s sufficient enough to help you in your decision whether outsourcing is the right solution for your business or not. If you have not yet tried outsourcing and you want to “test the water” you may start by outsourcing some of your day-to-day admin tasks. This will not only save you time and money but we’ll also allow you and your team to focus on your core business functions and tasks that require your expertise so you can accelerate your growth.
At Global Connections, we make outsourcing as easy as delegating tasks to your in-house team. Our team specializes in lead generation, email sourcing, contact database cleansing, data entry, email campaign management, and LinkedIn lead generation. If you need help in any of these areas, tell us the details of your requirements here.
If you have experienced outsourcing or hiring remote workers, we would love to hear about it — good or bad — and we’ll consider including them in our next article.