How outsourcing can grow your business
As your business starts to take off, you may find yourself with a good problem: more work or orders than you can currently handle. If you are unsure about future demand, should you go ahead and hire additional staff or expand your manufacturing capacity?
For a growing number of businesses, outsourcing is the right answer.
Consider, too: tasks like HR, bookkeeping, IT, marketing, customer care, cyber security and other support services have exploded as your enterprise has scaled up. All of them demand consistency, precision, and skills – three qualities that can quickly run up your full-time, in-house labor costs. Outsourcing offers an economic alternative.
And even if you can multitask all of these jobs, chances are, your passion, skills, and vision are better spent elsewhere. Outsourcing can let you do what you do best.
Your competitors may be outsourcing already
The decision to outsource may require you to tweak your start-up mentality. Sure, you can continue to work late into the night, balancing payroll or designing trade show posters. Or you can add more in-house hires to handle routine tasks. But are either of those measures sustainable strategies for long-term growth?
For many growing businesses, the answer is no. Outsourcing support jobs allows their in-house talent to focus on core business growth.
Outsource Accelerator found that 68 percent of all U.S. companies outsource some key operational jobs to a business process outsourcer (BPO) or a managed services provider (MSP). Annually, this translates to around 300,000 jobs that no longer require administration, benefits, payroll, or anything from their U.S. headquarters.
A study conducted by Asia Premier One Source found that 80 percent of small businesses in the United States planned to outsource in 2021. If your competitors are in this group, outsourcing may be giving them the edge they need to grow their market share.
The modern outsourcing industry understands your business needs
The outsourcing industry includes a burgeoning number of third-party organizations located around the globe that are contracted to supply remote workers to perform specific business functions.
- A majority of these outsourcing firms are located in India and the Philippines, but they can be found in many other developing countries. The common denominators are lower costs-of-living and lower wages, two factors that make them ideal for U.S. companies seeking affordable outsourcing options.
- They are huge employers in their respective countries – employing more than 14 million workers through their U.S. clients in 2018.
- They are profitable - generating more than $92.5 billion in revenue annually.
- They are rapidly growing in popularity, as the post-pandemic world recognizes the flexibility and value of remote work. Capitalcounselor.com predicts that outsourced IT jobs, alone, will generate $397.6 billion annually by 2025.
Outsourcing does not always mean off-site. Many rote, repetitive, high-volume tasks that tax the energy of your human workforce are increasingly handled by robotic process automation (RPA) – the software bots and virtual assistants that pop up on everything from customer service calls to online purchasing. One study predicted a 40.6 percent annual growth in this trend between 2020 and 2027.
Nine job functions that are regularly outsourced
While technology continues to expand the options for outsourcing, there are plenty of tasks that have already established a niche in the outsource ecosystem. Here are some of the most common:
- Human resources: Recruitment, training, policy compliance
- Administration: General business administration, operational activities,
- Website: Graphic design, web design, analytics,
- Social media: Scheduling, branding, maintaining social media presence
- Finance: Bookkeeping, purchasing, payroll
- Creative content: Blogs, brochures, videos
- Technology: IT, network management, cyber security
- Customer support: call centers, logistics, sales
- Marketing: Advertising, customer acquisition, branding campaigns.
Advantages of outsourcing
Outsourcing provides several advantages over increasing your in-house capacity.
Lower costs. In a survey conducted by Deloitte, cost-cutting was the number one reason businesses gave for outsourcing one or more job functions. In addition to paying a lower wage per capita, outsourced jobs do not have any of the overhead that drives up labor costs of your in-house hires. Things like onboarding, training, benefits, and payroll are all undertaken by the outsourcing firm.
Greater Efficiency. As your company has grown, your employees may have seen their job descriptions explode. In addition to their core competencies, your star players may now be weighted down with dozens of ancillary tasks like payroll, training, or customer care. At a certain point, this admirable collaborative spirit can backfire – leaving important tasks done poorly (or not at all) and burning out your most valued talent.
Expanded capacity. Your in-house staffing might be sufficient for routine challenges, but business growth is a big violator of ‘routine.’ Your business may benefit from specialized expertise to handle one-off projects or limited campaigns. Outsourcing can give you access to different skills without bearing the burden of full-time employment. This comes in handy when your business needs to create a new marketing campaign, rebuild its website, or draft new HR policies.
Global competitiveness. As your business expands, you may not want your customer service or sales force to be limited to one time zone or locale. Outsourcing is already global.
And when you hire in-house employees…
You cannot outsource you. Your business will always need in-house employees whose talents and drive complement your own. That said, in the highly competitive post-pandemic economy, you might need help identifying your recruits. Outsourcing HR can help you do that, too.
“Right now it’s a bit of a feeding frenzy in many sectors,“ says Patricia Hunt Sinacole, CEO of First Beacon Group, LLC, a human capital firm.
“So many companies are vying for the same candidates that it’s a full-time job to identify quality talent and design a competitive package. Because I have a large community of employers and talent, I can see what the larger hiring trends are and identify possible advantages for my clients. I have a lot of great contacts that any one recruitment team wouldn’t necessarily have.”
Those contacts can provide some helpful referrals. For instance, a few weeks after placing a highly skilled accounting manager in a new position, First Beacon was asked to fill a similar role by another client.
“Well, I knew that this first placement was doing well and I figured she would know others who performed at her level. So I called her. She was able to alert us to candidates who might not have been looking.”
Make a plan to grow your own way
Whether you are launching a start-up or taking your small business to the next level, outsourcing can offer the freedom to grow your own way. Make it part of your business plan so you can test its effectiveness as you:
- Outsource some jobs during seasonal upswings and return to your core staff when demand shrinks.
- Permanently outsource some ancillary business functions to make your core business leaner and meaner – more able to seize upon profitable new ventures.
- Temporarily outsource to increase production. If demand remains strong, you might permanently transition the jobs to in-house hires. If demand weakens, you are not tied to the additional payroll costs.
Just remember, the reason you may need to outsource some tasks is because your business has more demand than you can handle with your current staff. And that’s a good problem to have.