When Should You Outsource? The When, Why, & How of Outsourcing
Outsourcing your work is a sensitive topic in the United States work culture.
However, it is an effective way of expanding the scope and capabilities of a business without breaking the budget. The tricky part is identifying when a task is worth your time and when you’re better off paying for additional help to take care of it.
With this handy outsourcing guide, we’ll clear up misconceptions about what outsourcing is, the pros and cons, and how utilizing this strategy can help you save money.
What is Outsourcing?
Outsourcing is the process of hiring an outside, third-party party to perform services or complete tasks that are otherwise performed by your in-house team.
In the U.S. culture, we regularly associate with outsourcing exclusively with help hired outside of the country. However, according to this definition, outsourcing your work can apply to hiring an individual freelancer or a fulfillment company that specializes in assisting existing companies with specific objectives.
When Should You Outsource Your Work?
Knowing when it’s right to outsource requires an evaluation of yourself, your team’s current capabilities, and your overall goals for the company.
Here are some important questions that can help you decide when it’s time to consider outsourcing:
1. Can Your Team Complete Daily Tasks without Compromising Quality?
A sign of a busy team can be positive or negative. On one hand, having plenty of work means that your business is acquiring new clients and making deals at a steady or hectic rate. On the other hand, it can be a sign that your current workflow is not ideal for getting quality work from your team members.
First, analyze what you can do to improve your project management. Familiarize yourself with each team member’s day-to-day activities and interview them regarding their current workload. This information will help you isolate the cause of the issue.
If the amount of work coming in exceeds the capabilities of what your team can realistically achieve, outsourcing can alleviate some of that excess pressure. This can help with redistributing tasks in a way that allows you to get the best work possible out of all parties.
2. You’re Looking to Grow or Expand Your Offerings
Growth is a necessary part of business survival. However, the time for growth may come before you have the resources or means to make significant changes to your team internally. Examining the average rates for outsourced or freelanced help may lead you to conclude that outsourced help is an ideal solution.
Hiring external help to expand your offerings is not uncommon. A study from 99Firms indicates that there are approximately 1.1 billion freelancers worldwide. 45% of those freelancers possess a post-graduate degree.
Not only does this indicate a genuine demand for outside help, but it also battles the stigma that third-party help must be cheap or low-quality. Because outsourced help typically works via temporary contracts, you also have the freedom to let go of a third party at any time if the work is not aligning with your business goals.
Some companies specialize in offering professional services to other companies only as opposed to personal clients. For example, an e-commerce company is likely to outsource its shipping services to companies such as ShipBob. DashClicks itself provides fulfillment services to other marketing agencies for the express purpose of helping them grow with reliable quality.
3. You Lack Talents for a Key, One-Time Projects
There’s a possible scenario in which a key client that loves your business commissions you to do something beyond your team’s current capabilities. For example, they may require a new, robust website that’s complete with content and SEO optimizations. While your marketing company specializes in the latter, you may need help with the initial development.
Rather than denying and potentially losing an important client over one aspect of the project, consider outsourcing. There are talented web designers around the world looking for work as a primary or supplemental form of income.
You will still manage and facilitate the project. Your team communicates what’s needed for the outsourced assignment and continues the work in-house until the task is complete. You’re able to serve and satisfy your client without spending unnecessary resources on scouting and hiring a permanent team member for a service you do not typically offer.
4. You Do Not Enjoy Completing Certain Tasks
Before you started your own business, you were always hands-on with the creative tasks that you enjoy. Now you find yourself spending a chunk of each day performing tedious clerical work. It’s vital for the company and someone needs to do it.
Or, you can consider outsourcing your dreaded tasks to a third party. Not only will you improve your work life, but you can also potentially save money when viewing rates for outside help as opposed to what you would pay yourself.
In addition to the potential monetary benefits, you also free up that time each day to focus your efforts on areas where they can better serve the company. Removing tasks that you do not enjoy from your plate is not only personally satisfying but can help your company grow and become more efficient in certain scenarios.
The Advantages of Outsourcing
We can all relate to the above scenarios where outsourcing seems viable, but are the advantages worth it?
Let’s examine the advantages of outsourcing as well as some of the cons so that you can make an informed decision regarding your next hire.
1. Outsourcing Saves Money
How does outsourcing save money if you still need to hire someone for the task? Outsourcing helps your business cut costs in several ways.
The first is that you only need to pay for work as needed. This is as opposed to devoting resources to scouting, interviewing, hiring, and paying the salary of an individual whose work might only be necessary on an irregular basis.
The second way is by reducing the amount of office space and equipment necessary for your team. When hiring third-party help, the hired individual is expected to have all of the abilities and resources necessary to complete the task without your assistance.
The third way is by having the freedom to determine which rates benefit you most. Freelancers may fluctuate their ongoing rates depending on the availability of work. Though it may take a bit of effort to scout the right talent for the right price, you have much more freedom when hiring temporary help when compared to offering a competitive salary and benefits to a full-time employee.
2. It Creates the Opportunity for Higher-Quality Work
When the workload becomes too demanding, the quality of your team’s work typically suffers. A high-stress, unrealistic work environment not only damages team morale but can harm your reputation with clients due to poor results.
By outsourcing help for specific tasks, you can give your team the freedom they need to focus on their specialties. After all, you hire your permanent team members because they excel at performing specific tasks. By offloading the routine, tedious work to an eager contractor, you make everyone’s lives easier, while also benefiting your company in myriad ways.
3. Gain Expert Help at a Lower Cost
As stated at the beginning of this article, outsourced work does not only need to feature tedious, monotonous tasks. In many cases, outsourcing a specific task to an expert can help your company grow and expand its number of offerings.
Even if the upfront rate seems higher initially, remember how this cost compares to hiring a full-time expert. You will benefit from working with experts that possess years of experience without the need to offer a competitive salary or compensation package to an equivalent hire.
4. Get Tasks Completed Faster
When you delegate a task to a full-time team member, you need to schedule this task around their existing responsibilities and work schedule.
When you outsource that task to a third party, you get to dictate the terms. If you need a fast turnaround, communicate this when you put out the call for help. Interested and capable parties that do not have the same obligations will be able to deliver results at a faster rate. If they do fail to deliver anything at all, you only lose out on time.
What Are the Downsides of Outsourcing?
As with all things in life, all positive things also come with potential downsides. It’s merely a matter of weighing the potential benefit of the advantages versus the potential negatives.
Here are some of the most common downsides associated with outsourcing:
1. You’ll Still Spend Time Performing QA
Quality assurance is a standard part of completing any project. However, this process is generally far more simple when performed in-house as your team is trained to complete assignments your way. All of your team members are familiar with this process, which makes it much easier to lean on them to see a project to completion.
When hiring outsourced help, that built-in understanding is no longer present. Of course, you can help improve the odds of receiving quality work by providing a quality onboarding experience for any freelancer. The better you can communicate the requirements, the more likely they will deliver a product that’s close to your expectations.
This, of course, is not a guarantee. If the person completes a project that’s not up to your standards, you’ll still be spending time proofing, requesting revisions, or completing the edits yourself. This issue is compounded if the individual does not use your language natively.
2. Communication Can Be a Problem
While there’s no liability to a one-time hire, this works both ways. Because an outsourced hire is not a company employee, they are not obligated to be as communicative as you might hope.
Communication issues in-house can quickly be resolved as you share the same office. However, a third-party hire can exist anywhere in the world and has to work around their personal life and schedule.
Issues once again can be compounded if the person lives in a different time zone. It’s common to outsource help from overseas, which creates language and logistical barriers that you must prepare to work through.
3. You Deny Your In-House Team Opportunities
This is a sensitive issue to navigate and requires a deep understanding of those who make up your company. While a passionate team is willing to work hard for their company, they also should improve themselves and discover new opportunities.
When you immediately delegate certain tasks to outside help, you deny an in-house employee the opportunity to learn and develop. Your employees may see your attempts to outsource as a direct negative toward their personal career development. If you deny your employees the opportunity to expand their resumes and improve their level of income, you may risk losing them to a company that will.
4. There’s a Risk of Damaging Your Reputation
This one will also require you to understand an important party – your customers. As stated in the beginning, the United States in particular is known to take strong stances against outsourcing. Not only can it impact your internal team, but your customers may also have a moral stance against the act.
Additionally, your customers have the right to expect your in-house team to complete the requested work. If you outsource some or all of the project to a third party at home or abroad, it can automatically trigger two responses.
The first is that the work is low-quality as it comes from an untrusted source. The customer chooses to give their money to your company and you repay that trust by utilizing an unknown party. Even if the work is quality, the customer may feel betrayed as they were not able to make an educated purchasing decision.
The second concern is the fear that they are overpaying. When you outsource help, the expectation is that the company is saving money. When the customer pays the same rate for outsourced help as they would for internal help, they’re going to assume that they’re being taken advantage of, so that your company can pocket the profits.
Know the Advantages and Risks Before Outsourcing
Outsourcing is a common practice. As the statistics above show, more people are working from home and as a freelancer than ever.
A business that leans on outsourced help can potentially save money, improve project turn-around, help mitigate workflow issues, and discover growth opportunities.
However, it’s important to be keenly aware of how outsourcing your work can impact your company’s reputation with in-house employees and customers. It’s essential that you gauge the response and feeling toward outsourced work before making your final decision. You want to use outsourcing to propel your company forward, not to alienate those that brought you to where you are.
As long as you have an understanding of where your company stands and appropriately weigh the risks, outsourcing may be a genuine solution for your business needs. Use this guide as necessary to aid in your decision-making process down the line.