Outsourcing is a hotly debated topic in the labour scene. Is it a good thing or a bad thing? Many companies are hesitant to hand over direct control of their business operations to a third party. Then, there is always the risk of subpar service, instability and confidentiality breach. Despite the current trend that seven out of 10 companies in the UK contract out services to external vendors, with 30% planning to outsource more by 2022. If there is one thing the statistics prove is that outsourcing does work for the majority of businesses.
But what is outsourcing? In simplest terms, it is hiring out business functions to third-party providers instead of recruiting new employees. Many big organisations contract out services to offshore locations for long-term deals. But in the realm of small businesses and startups, outsourcing could mean seeking out an independent Human Resource company to take care of their HR functions or hiring an accountant to do their annual taxes.
Outsourcing has several advantages which essentially outweigh the risks. The most apparent and noticeable benefit is cost savings, particularly in labour and overhead expenses. However, it has a variety of less visible but equally vital contributions to business growth. Outsourcing enables companies to focus on core tasks, promote staffing flexibility, increase efficiency, and access new resources. With that said, there are three ways outsourcing can prove beneficial to your business.
1. Staffing Issues
Imagine a scenario wherein your IT manager is leaving for a new job at a critical time and her administrative assistant is on an extended medical leave. What would you do to prevent disruption of operations? Of course, you can always hire a replacement but rushing to fill in the vacancy puts you at risk of hiring the wrong person. And that is not good for your business.
Employee turnover impacts your company’s process flow and creates inconsistency and uncertainty, which could hurt your organisation drastically. Delegating specific functions such as IT, HR, and finance to a third party guarantees business continuity. It enables your organisation to keep operating even when some of the employees are unavailable. It also ensures that your company stays productive and is able to provide excellent products and services to your clients. Additionally, outsourcing gives you sufficient time to look for a new employee without hurrying the recruitment process, allowing you to get the right talent.
Outsourcing brings in additional resources – helping hands – whenever they are necessary. Once things slow down, you can end the contract. For instance, you can hire a freelance accountant or an accounting firm during tax season and auditing periods.
Businesses that depend on walk-in and fixed clientele such as veterinary clinics also need a backup staff to ensure customers always get the service they need, creating plenty of locum veterinary jobs for the self employed vet market. A clinic should never shut down just because the doctor in charge is on vacation. It undermines the business’ reputation, which could lead it to lose customers to its competitors. Contracting out locums to take over the tasks helps maintain the level of clients and promotes brand loyalty.
Furthermore, outsourcing gives you access to highly skilled and experienced talents you otherwise would not get without spending loads of money on extensive training. Because outsourced workers are experts in their fields and focus only on a fixed set of duties, they help make the operations go more smoothly and efficiently. Lastly, outsourcing allows you to concentrate more on core areas, such as building your brand, broadening your clientele and expanding your business.
2. Saving You Time and Money
A survey by PA Consulting reveals that 71% of UK businesses that outsource cite cost reduction as their top reason. But how does outsourcing reduce your company expenses? Employing third-party vendors cuts down recruitment and labour expenses. Considering that the average cost of hiring a new employee in the UK is £3,000, it is quite understandable why many companies choose to contract out certain services instead. Then, after you bring in a full-time employee, you have to start factoring in other expenditures such as salary, health insurance, training fees, and gratuity benefits.
Meanwhile, you can get a freelancer by simply posting your job advert online. Independent contractors typically only charge per project or an hourly rate for the task they carry out. And because these people are already experts in their fields, no training is necessary. You save both time and money without sacrificing the quality of output. In other words, outsourcing allows you to collaborate with experienced professionals without overstretching your budget and resources. If you are outsourcing services overseas, you can leverage the lower wages of most offshore countries.
Outsourcing also eliminates the need to move to another location or buy new equipment. When you are just starting your business, it more cost-effective and practical to outsource smaller tasks rather than expand internally only to struggle with providing adequate office space.
Contracting simple jobs such as content creation, payroll management, email marketing frees up your employees’ workload and schedule. It reduces the time spent on planning and reviewing processes. You and your staff can now focus on the stuff that truly matters, which is growing your business.
3. System Maintenance and Security
Every business, regardless of size, needs an efficient IT team to provide a wide range of technical support – from securing the network to installing software and managing the systems. However, not all companies can afford to hire in-house IT personnel to perform these crucial tasks. Furthermore, many businesses lack the required technology.
You can contact a technician when something goes wrong. However, that is merely a quick and temporary fix. The best solution is to hire a third-party service provider to protect your network from malicious cyber activities, prevent downtime and ensure smooth-sailing operations. Consider contracting electronic recruitment agencies to help bring on independent electronic and software engineers to help maintain and secure your internal systems.
IT contractors also have specific industry knowledge on compliance and security. They can help keep your processes up-to-date and compliant with legal requirements. More importantly, hiring third-party providers levels the playing field for small businesses and startups that cannot acquire advanced technology by themselves. Indeed, outsourcing allows you to access tools and expertise that typically only big and established companies enjoy.