Outsourcing is defined as the practice in which one party gives out a contract-based appointment to another party to carry out services for them and take care of other business tasks. An example of this would be when a company outsources its hiring process to human resources agencies that handle all their human resource matters. Outsourcing is extremely popular amongst businesses and households as it is cost-effective, helps streamline operations, and gets things done.
Whether it be concerned with settling new furniture in your office or swimming pool installation in your home – absolutely anything can get done through outsourcing as the digital means to hire extra hands gains popularity over time. Another common example of an outsourced task is how companies hire a tax manager on a yearly basis, who only shows up to the office once or twice a year to take care of annual taxes.
For businesses, outsourcing poses to have a number of advantages which include the following:
1. Outsourcing helps companies focus on their core activities
Companies who see rapid growth often find themselves being limited and tied up in operations due to piling back-office work. While back-office and administrative work are crucial to keeping your company running, it tends to tie up important resources that could be used elsewhere in a more productive manner. Companies who find themselves not being able to work in the core product area and not being able to actively innovate find it very helpful to outsource back-office work.
2. Outsourcing helps companies lower costs
Oftentimes, companies have to perform supporting tasks that are essential but cost them too much in comparison to the value they bring. Companies who lack expertise in certain areas face human resource costs when they look to hire someone accordingly to fill that gap. Firms looking to increase production find out that hosting another in-house facility is likely to cost them an arm and a leg. For all such issues, outsourcing is a highly cost-effective method of getting things done. Since companies that take up outsourced work specialize in it, they are able to get the same work done in a much effective and cheaper way as compared to you.
3.Outsourcing helps companies gain flexibility and agility
Companies that operate in today’s dynamic work environment need to be agile and flexible in their operations. Companies that outsource on a regular basis, find themselves more “free” to take up newer projects, pivot in projects where they foresee a loss, devise new functioning strategies, and face oncoming threats headfast. This is possible because they are able to shift significant workloads off their shoulders. An example of this would be that if a company foresees a need for human resources in the coming time, they would simply ask their outsourced human resources department to start looking for a new candidate. The alternative to this could have been companies processing an employment request, advertising, shortlisting candidates, interviewing them, and then making a selection. Not only does the alternative limit the company, but it also slows things down.