As businesses grow, they often experience situations in which their internal team is unable to fully complete tasks or offer services that are vital to the company. In this situation, you may be stuck trying to decide between spending the time and money onboarding new in-house talent or looking elsewhere. That’s where outsourcing comes in. If you’ve ever wondered, “Why do companies choose to outsource work?” we’ve got the answer for you!
In a time when collaboration, third-party vendors, and freelance networks are at an all-time high, the reasons why companies outsource can’t be ignored. Today’s consumers expect short turnaround times and top-quality products/services, with little room for missteps. The demand and intense level of competition has caused many companies to outsource components of their business operations. This adoption within the business model has given companies in all industries the necessary tools and flexibility to remain effective and timely in meeting the needs of their target audiences.
What Is Outsourcing?
Before we discuss the reasons why companies outsource talent, let’s first talk about what outsourcing is.
Outsourcing is the practice of hiring third-party companies or individuals to handle certain services or tasks. This recruitment practice often happens domestically but can occur internationally in the form of offshoring. There are ample benefits to outsourcing work that explain just why companies choose this route.
In fact, businesses that outsource work hold an overwhelmingly positive opinion of the practice — 78% of businesses across the world feel good about their outsourcing partner relationships. With the gig economy growing, the rise of AI and machine learning, as well as over 59 million freelance workers in the United States, outsourcing work is not just a pressure relief valve or cost reduction center. It’s a modern solution to challenging business dynamics.
Let’s dive a little bit deeper into why companies choose to outsource work below.
Why Companies Outsource
There are a variety of reasons why a company may need to outsource work. Each company has a unique need for talent that can lead them to find outsourced solutions. Keep reading to learn a bit more about the different reasons why companies outsource work.
#1 Decrease Time-Consuming Tasks
Often, the services that are being outsourced are too time-consuming and require more attention than in-house employees can give. In offloading these types of tasks to outside skilled workers, or AI solutions that can automate the production, internal employees get the time they need to prioritize more pressing or specialized tasks. Roughly ¼ of small businesses outsource work to improve their business efficiency and time management.
#2 Core Business Focus
With a decrease in time-consuming tasks, your in-house employees will have the opportunity to focus on the top priority core business services. Company-wide productivity will likely increase with this extra time in the day to focus on these tasks. There are essential parts of your business that must remain in-house. These are the tasks that require the most focus and care from your team. The quality in which these tasks are performed is critical to business success, regardless of how well outsourced work is completed. Therefore, businesses must allow their teams the necessary time to focus on core business priorities. In addition, your team will have more time to collaborate on these larger projects and ensure that they meet company expectations.
#3 Qualified Talent Pool
Though there are plenty of options for in-house talent, recruiting an outsourced team can open up a wider pool of qualified talent. Many outsourced individuals focus particularly on certain specialties, meaning they likely have exceptional skills and certifications in that field. Thirty-six percent of U.S. workers belong to the gig economy, making it an easy choice for many companies to find the right skill sets to fulfill their outsourced needs. You won’t have to worry about additional onboarding or vetting in-house candidates to fulfill these services.
#4 Access To New Tools
Some services may require specialized equipment or software that your company does not have full access to. In this situation, choosing to outsource to a qualified team may grant you access to these technologies. Your outsourced team will be able to complete tasks using this equipment and software without your company having to spend the additional money to buy into these programs. This shift has also caused many organizations to speed up their digital transformation approach and their adoption of cloud services and improved network security.
#5 Process Improvement
Before you onboard outsourced professionals, it may be necessary to review your current procedures and find room for improvement. You’ll want to make sure that you have a clear process for your services and that your outsourced team can quickly adapt to company-specific procedures. Make any necessary changes or improvements to your process beforehand so you all can be on the same page.
Additionally, your qualified team of outsourced individuals may notice that parts of your process could run smoother or be enhanced for better results. In this case, be prepared to receive feedback and reevaluate your work processes based on professional recommendations.
#6 New Market Access
Since your outsourced team may be from a different area than your company headquarters, you’ll gain access to a whole new market. If your team is overseas, you may have the opportunity to expand your services to a new audience that is geographically closer to your outsourced team. Individuals will be able to meet company expectations and offer your product or service right in their own hometown.
#7 Improved Customer Service
Working in combination with productivity and an enhanced talent pool, you may start to notice an uptick in customer satisfaction. Since your services are being outsourced to a trained group of professionals, they’ll be able to answer customer questions and concerns while enabling your company to assist customers to the best of your ability. For example, outsourced IT support can answer customer questions and troubleshoot technical issues in real-time without having to track down answers, quickly refresh on solutions, or take up valuable time for other tasks. By 2025, the global outsourcing IT market is expected to be worth nearly $400 billion — an indicator that companies of all sizes and industries are moving toward this investment and work model.
#8 Risk Sharing
Running a business comes with plenty of risks. When you choose to partner with an outsourcing company, you’re essentially sharing that risk with another company. This may be the risk of low return on investments (ROI) from unsatisfactory work and unhappy customers or the inability to properly handle unexpected and costly issues. Whatever the risk may be, working with an outsourcing company can distribute that risk between both parties being held accountable for satisfactory work.
#9 Business Cost Reduction
The final benefit of outsourcing is an overall business cost reduction — which is the primary driver for reasons why companies outsource work. Typically, this reduction is seen in labor costs — outsourcing can be a more budget-friendly option. Choosing to outsource work can save your business money on equipment and software, payroll, onboarding, and more. You’ll be spending less money per project, leaving you with the opportunity for a higher ROI and more success.
Find Outsourced Professionals With C9 Staff
So why do companies choose to outsource work? While some drawbacks may exist, the benefits afford organizations improved flexibility and optionality when it comes time to make a new hire or adjust workflows. Ready to make your next outsourced hire? With C9 Staff, you’ll be able to connect with trained professionals from around the world ready to join your team and assist your company.
We’ll handle all the hiring processes from recruitment to payroll and contracts so you can keep your focus on growing your business. Contact us today to learn more about our services and how we can connect you with qualified professionals!