Why Do Companies Choose to Outsource Work?

The world has changed a lot in the past several years, with more and more individuals working remotely than going into the office every day. But why do companies choose to outsource work? What outsourcing reasons might they have?

We’re answering all of these questions and more in today’s post, so keep on reading!

Why companies outsource

Starting with the definition is probably the best way of going about things when dealing with this strategy. Outsourcing is when a company does what? How does outsourcing work? 

The term is usually associated with hiring employees based in completely different countries, but this does not necessarily apply to each individual case. Sometimes, outsourcing might mean hiring a contractor based in the same country as the company for specific tasks such as managing a brand’s social media accounts. 

Outsourcing also doesn’t necessarily mean that the freelancer has no contract or has to pay all of the taxes themselves. Hiring remotely is possible these days as if these people were to go in and out of the office during the standard working hours. 

In a nutshell, companies choose to hire a variety of individuals no matter their location because of their skills and not for other reasons. Sometimes, their services might be more affordable, and their quality of work can be up to par. 

There have been lots of studies performed on how people manage to work remotely. The truth is that some individuals are fully capable of organizing their schedules without the assistance of a manager, especially when performing a set of limited tasks. 

In the sections below, we’re looking at several reasons why outsourcing is good, especially for small to medium businesses, which might not have huge budgets. 

Reasons to outsource

Lower costs

Any startup needs to have as much control over their operations and the way they spend their budget as possible. Otherwise, things can go very wrong. 

According to some sources, outsourcing can save some firms as much as 20 to 30% of what they would normally spend by bringing someone to work for them in-house. 

But why does an in-house team cost more? Well, the answer to this question is quite simple. Different countries have different types of living costs. For simple tasks such as data entry, one can hire people in countries where paying them 50% of the normal salary in the United Kingdom can make for an extremely competitive (and hard to say no to) offer. 

On top of that, higher salaries usually involve things such as transportation to and from the office. You’re paying people not for the hours they spend working for you, but also the hours they spend on the train to and from home. 

Another aspect that we would like to point out here is that companies choose to outsource to employees that work remotely also because they can save a lot of money that they would otherwise spend on rent. 

Top talent

Finding the best people in the industry to help you get the job done, and what we mean by this is the best individuals across the world automatically translates to a lot of success for your brand. 

Most SEOs work remotely. In fact, very few of them are hired by companies as most prefer to have several different clients, so therefore, several different income streams. Believe it or not, this makes them feel more secure. 

Naturally, it all depends on the specific platform that the company chooses to utilize. We do not recommend freelancers, especially to start working outside of the platform, but if they have a good collaboration that spans across several years, they might become a full-time employee of that company at one point. 

Upwork is a good example of a place where companies can go and look for highly specialized freelancers, and many of them have excellent reviews. It’s worth checking out if you’re looking for a contractor for a specific job. 

Efficiency

If you have someone in-house that’s highly skilled and that knows how to do their job very well, but their workload has become too much to bear in the past several months, you can simply get a contractor to handle the so-called ‘grunt work’. 

Things that can easily be done in Excel, transcriptions, data entry, and a wide range of such other tasks can be outsourced successfully to people anywhere in the world. 

This makes it possible for the managers to feel relieved that they do not have to continue working outside working hours. Also, they’ll have a much lower chance of suffering from burnout. 

Less micromanaging

With simpler tasks comes simple management, and that couldn’t be truer. If you get someone to do specific things time and again and you have an editor or someone that can quickly check the work that was done, you can save a lot of time that you’d otherwise waste on micromanaging your team. 

You can use all that time to make sure that the company focuses on the goals and how to meet them as effectively and conveniently as possible. 

Prioritization of tasks 

In any kind of business, some projects or parts thereof are more important than others. So why not let someone who knows how to complete the least important ones so that you and the rest of your team can concentrate on the essential ones, the ones that your client is likely to ask you about the most? 

Are there any cons to employment outsourcing?

Outsourcing isn’t a dream come true for every company, and sometimes it might take a lot of time and a lot of effort for you to find the right contractors. 

Another thing we’d like to add here is that not everyone feels they have to work for cheap. Like in any other industry, you get what you pay for. If you’re looking for the most affordable person to get the job done, they might do it for a while if they’re highly skilled, but at one point, they are going to look for a higher-paying gig. 

Without further ado, here are some possible disadvantages to using outsourcing in your operations. 

Your team might not be comfortable with this 

If you tell your team that works in the office right from the beginning that there are people across the world performing certain tasks, they might have no issue with this whatsoever. 

However, if they have a moderate workload and you start finding cheaper employees on the other side of the planet to take some of their tasks, they might feel threatened — even if you change their job profile and ask them to do something else. 

This used to be a pretty big problem for companies in the past, especially startups. A good person who has a decent amount of experience might think they have no future in a firm if they see that there are a lot of offshore contractors doing most of the work. 

But these days, things have changed, and a lot of individuals now work remotely, so the likelihood of you losing employees if you do this is significantly lower. 

Communication problems

This is perhaps the most challenging thing to manage when starting to work with a freelancer. On the one hand, their working hours might not be the same as your own. 

For example, if you are located in the United Kingdom, and your contractor is located in India, there will be a significant time difference between the two of you. You will also have a harder time finding a common ground for conference calls, so sooner or later, you will have to ask them to work at night — needless to say, no one likes this. 

On top of that, not all contractors are serious and actually mean what they say. They could take far longer to perform a specific task, and if you’ve set a deadline to stick to another deadline yourself (for your client), things can get very, very complicated. 

Sometimes, freelancers just disappear, and you have no one to communicate with for weeks on end. This is a risk that you have to assume, especially when hiring cheap workers. 

Security issues

If you get a freelancer to handle some tasks such as data entry or adding new articles on your website on a regular basis, they will have access to some of your login information. 

Besides the fact that you do not want to put your company at risk in any way, there could be other things that might happen. For example, if you run several different websites (or have an affiliate empire) and you get someone to upload content to all of them, they might end up selling links from your sites at one point — which could get you penalized. 

Different standards

This con relates to the communication problem that we have already described. But the truth is that for every type of work, standards can differ from one country to the next and from one freelancer to another. 

You might expect to be delivered a product or service, and you could end up with something entirely different. 

Outsourcing employees from other countries

When it comes to outsourcing, most firms have two options — they can either hire an agency to handle the process and find the right people, which would automatically translate to less hassle on the part of the main company, or they can hire the contractor themselves. 

Sites like Fiverr, Upwork, Freelancer.com, Behance, Flexjobs, 99designs, Toptal, and even PeoplePerHour can all come in handy when looking for someone to get a task done. 

Unfortunately, you will have to test out several different contractors before finding the right one. Sometimes, there can be language barriers, communication difficulties, and people that just aren’t capable of doing their job. 

Besides online tasks, some can be quite challenging to outsource, such as manufacturing physical products. In this case, a team of managers from the company would have to travel to that country and check the quality standards of the products, talk to the manufacturer, draft a contract, and do other such things that can complicate the entire process. 

What are the typically outsourced activities?

You probably know that web development is the most outsourced activity of all in the employment marketplace right now, but here are others:

  • Content writing
  • Marketing
  • Advertising
  • Production and manufacturing
  • Accounting 
  • Video editing
  • Training/consultancy
  • Research and development
  • Customer service
  • Recruitment

Requirements for companies outsourcing 

There are some golden rules to outsourcing that anyone should abide by, whether they own a small or a large firm. Here are several:

Goals

Defining the company goals and how outsourcing can help with achieving them is the first step to doing all of this successfully. 

Both your internal and external teams should have specific expectations, and you have to know when they have to be met, according to which standards, and any factors that might influence the development of a certain project. 

Budget

The most important question that a firm that’s looking to outsource some of their work, especially offshore, has to ask is this: how much money will all of this cost? 

Defining a specific budget and even making an estimate of how much the company will spend across several months can help managers understand the exact budget needs for outsourcing. 

Specific management

Does the contractor have to work with a manager in-house? If that’s the case, how many times a month are they going to go through what work the freelancer has completed? What are the quality standards of the work, and how will the manager check that it is up to par? Find out the answers to all of these questions for a successful outsourcing strategy. 

Building a relationship

People aren’t robots, and you probably know this. They thrive on human interaction, and since this is not something that they might be able to get from 2,000 miles away, the best way to keep your contractors happy is to be in constant communication with them. 

Try not to overdo it, though, since not all people are happy with talking to their employer day in and day out, especially when they are otherwise capable of doing their job without anyone controlling it. 

Bonuses, discounts, and any other extras you might be able to offer can impact your working relationship in a positive way. 

Communication expectations

Open communication is essential to completing any project. Stakeholders have to understand the part they play in the whole project. Try to think of a time where your manager and the contractors can talk to each other each week — Friday afternoon would be a good example since they could talk about what they’ve done during the week. 

Need help with your SEO or digital marketing efforts? We have lots of plans and courses available. Get in touch to find out how we can be of assistance!

 

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Craig Campbell

I am a Glasgow based SEO expert who has been doing SEO for 18 years.

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