It’s a concept people get fired up about. Some people love it; others hate it. It seems as though nothing divides a room full of business professionals faster than the idea of sending some services out of house.
Although some people will argue against it until they’re blue in the face, outsourcing is incredibly important for virtually every business today.
In fact, the global business process outsourcing (BPO) market was valued at $261.9 billion in 2022 and is projected to grow at 9.4% CAGR through 2030 (Grand View Research).
The Obvious Benefits of outsourcing
Cost reduction consistently ranks among the top drivers for companies choosing to outsource, according to multiple industry surveys and reports.
Outsourcing will save you time and money. It’s often the first thing mentioned when someone suggests you should outsource this function or service. Some businesses send their HR functions to an outside company, while others will seek outside help for everything from customer service to marketing to PR to strategic planning and consulting. There’s no shortage of services and functions to outsource.
The major reason firms opt to outsource is because it does save time and money. Take customer service for example: By contracting with a third-party provider, you get instant access to a team of highly qualified customer service reps who interact with your customers using the latest technology and techniques. Your customers get better care, your reps resolve issues faster, and you don’t need to deal with high turnover or infrastructure costs. Everybody wins!
Leveraging Expertise Through Outsourcing
There are plenty of less obvious reasons to outsource. Once the cost-saving and time-saving aspects have been discussed, many people argue there’s no additional benefit to outsourcing, which simply isn’t true.
A move to outsource is akin to asking for a helping hand. Plenty of smaller firms outsource not because they want to cut their overhead or they can’t find qualified staff, but because they simply don’t have the in-house expertise. In growth situations, they don’t have time to develop it either. In that case, seeking out a third-party provider is perhaps the smartest move a firm can make.
According to Clutch’s small business outsourcing survey, many companies outsource to improve efficiency (37%) or to get help from experts (37%) — highlighting the importance of expertise and operational support in outsourcing decisions.
Supporting Business Growth with Outsourcing
While growth is usually a good thing, a business can experience growing pains. Managing growth is often difficult, and your firm might struggle to keep up with demand. Teaming up with a third-party provider is the best thing you can do. Again, look at customer service as an example: You might have some great reps already in place, but they’re suddenly overwhelmed by the volume, and you just keep growing.
Your customer service provider adds a team of highly trained customer service reps to supplement your existing team. You’re not going to be able to hire and train a team overnight, but outsourcing gives you instant access to the growth support you need.
Gaining Access to Advanced Technology
Infrastructure cost is another major concern when it comes to in-house services. Companies that outsource HR might choose to do so because implementing a new payroll system is expensive. A firm that sends customer service out of house might be looking at the total cost of implementing the technology needed to run the most up-to-date contact center and provide customers with the best service possible.
Your third-party provider has already invested in the technology needed to deliver the services you seek—and reps are already trained to use it.
Learn how outsourcing customer care can elevate your brand in our whitepaper ‘Build Your Brand by Outsourcing Customer Care
The Hidden Benefits of Outsourcing
- Even things like expertise and access to technology are fairly well-known benefits of outsourcing. There are other, lesser known advantages—the hidden benefits few people know about.
- One of them is actually branding: Outsourcing can help you develop or promote your firm’s brand. This is clear in a case like outsourced marketing, but it happens when you send other services out of house too.
- Customer service is a less obvious choice, but partnering with a third-party provider raises your brand profile by improving your customer service. When hidden benefits like this become obvious, it’s clear just how important outsourcing is for any company.
Discover how outsourcing can lead to significant cost savings in our comprehensive whitepaper.
Frequently Asked Questions About Outsourcing
What types of business functions can be outsourced?
Almost any business function can be outsourced: customer support, IT support, accounting, human resources, marketing, and administration. The best functions to outsource are those that lie outside of your company’s core competencies or require special skills.
Is outsourcing cost-effective for small businesses?
In fact, outsourcing can prove to be highly cost-effective for small businesses through minimizing overheads,avoiding costly expenditures for setting up infrastructures, and granting immediate access to skilled people without keeping people permanently on rolls.
What are the biggest risks of outsourcing?
The major risks include a possible loss of process control, protection of sensitive company data, communication/culture differences, and dependence upon the stability and performance of the provider. Selecting an established outsourcing business can help mitigate these risks.
