Why and what should businesses outsource
Outsourcing has become an essential strategy for businesses across various industries due to its numerous advantages. In this article, I’d like to review why businesses decide to outsource and what they commonly outsource. Also, I’ll mention a few words about the cons of outsourcing in some scenarios.
Cost of hiring
Saving costs is one of the primary reasons for outsourcing. Now, this is not because outsourcing is cheaper in comparison to paying an employee on your payroll. In some cases, you might be paying the same amount if you consider the time allocated for the task. Outsourcing may effectively be more affordable for a different reason.
Hiring in-house staff is a process that involves filtering candidates, interviewing them, and eventually onboarding them once the parties come to an agreement. By the time you hire the person, you haven’t even begun discussing your project. However, in-house staff is still the way to go in the long term. I’ll present a case later when, in fact, it might be necessary to do so.
Focus on core activities
It’s often the case that cooking at home is cheaper because you won’t shoulder the cost of running a restaurant business, and the delivery and service fees if it’s take-out. Essentially, you know that you are paying extra for the convenience. So, eat at home if you want to save money. However, how far should you take the practice of being frugal?
Say, you need tomatoes for the dish you are making. Do you have the means to grow fresh tomatoes? You need them now! So, off to the supermarket to get some. Similarly, in your business, analyze what constitutes your core activities and make a list of what can be acquired if needed. Circling back to the previous point, having in-house staff, and doing everything on your own may be cost-effective, but at the expense of taking too long.
Access to specialized skills
Sometimes, the skills you need simply don’t exist in your organization. Perhaps it isn’t your activity anyway. Getting legal help is a common example. Although documents will most likely be written in your native tongue, who has the expertise to decipher all the nuances of a legally binding document?
By delegating such tasks to external experts, your business can increase productivity. As I mentioned before, there may be times when this is not a smart move.
Although outsourcing can help mitigate risks, like outsourcing compliance tasks and having auditing done by a third party, there are some scenarios when you’ve got to handle the work in your own organization. For example, in healthcare, drugs, vaccines, bandages, and medical equipment, even the procurement of cleaning products is outsourced. Hospitals don’t make these products, they administer them. This is a common, seamless and non-contentious practice; most patients have different concerns.
As a patient, you would rather your healthcare professional be in an ongoing relationship with an institution. Contracts may come to an end, practitioners may decide to work with a different clinic. Nevertheless, you will have the peace of mind that you are dealing with an institution. Thus, it would be unethical of the clinic to simply hold a doctor responsible for when and if things go wrong.
Depending on the industry, there are things businesses can or can’t outsource either from a legal or trust point of view.
Let’s finish the why list on a positive note. Partnering with outsourcing firms can bring fresh perspectives and innovative ideas to your projects. An outsider may notice important things about your organization, product, service or whatever you want to take care of that you didn’t think of highlighting in the first place.
Ever bought something at a store that you thought you didn’t need, but it became apparent that it was actually the right move once you came across it? Your outsourcing partner may inform you of such cases. The course of the project may change for the better. In essence, you may know what you need but the detail may be in how it is done.
What Businesses Typically Outsource
So, what are the things businesses typically outsource? Here is a short list. Obviously, IT services such as software development and maintenance, helpdesk and technical support, network management and cybersecurity, data analytics and cloud services.
Next is more human-involved ones like customer support, recruitment and staffing, employee training and live chat. Then, you probably get your accounting sorted out by a financial counsellor. Similarly, legal and compliance are two common areas businesses seek help for. Most likely, your supply chain and logistics.
On the more creative side, there is graphic design, 3D art, video and audio production. This is where Viroid Games specializes.
We’ve seen businesses approach us for audio and video production since it requires specific expertise as I mentioned earlier in this article. Also, although creating art is one of their core activities, we’ve collaborated with other teams because they didn’t have the bandwidth at an important time in their production cycle. Hiring us temporarily seemed a much better option than going through a long recruitment process.
Occasionally, we find ourselves discussing the creation of a character for a new product. This usually starts as sketches that evolve to 2D concept art, and perhaps fully blown 3D animation at some point. It helps with creating a stronger and more memorable image for your brand.
In summary, the specific functions a business chooses to outsource depend on its needs, goals, and industry. Outsourcing decisions should be carefully evaluated, considering factors like cost, quality, and the potential impact on core operations. By outsourcing non-core activities, your business can reduce costs, and access specialized skills, ultimately improving overall efficiency and competitiveness.