Companies turn to outsourcing for a variety of reasons. It’s well known that this strategy can save businesses significant amounts in human resource costs, and effective outsourcing strategies can lead to improved efficiency and productivity. In today’s tight labor markets, this approach can also offer solutions when finding top talent is limited. However, more and more companies are realizing that outsourcing is an excellent way to expand one’s outreach. In fact, growth through outsourcing is rapidly becoming a main reason many firms consider it in the first place.
(Bold Business is more than just a publication… we also handle business process outsourcing!)
Just a few years ago, the percentage of companies choosing to leverage business process outsourcing was reported at 68%. In 2021, this figure had risen to 80%. Why? It wasn’t simply because of the cost savings that outsourcing offers. Instead, firms realized that that could achieve rapid growth through outsourcing because of other advantages. Specifically, effective outsourcing strategies offer 4 distinct ways to help businesses expand. While not all may apply to a particular company, any of them could create a competitive advantage. In fact, failing to consider outsourcing as a growth mechanism could create a distinct disadvantage in some markets.
“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” – Lee Kuan Yew, Former Prime Minister of Singapore
Outsourcing to Boost a Growth Mindset
For many companies, especially startups, members of the core team wear many hats. While they have their specific areas of expertise and talent, they must also deal with the more mundane tasks. As a result, they become distracted and bogged down, unable to allocate their full attention to expansion. If this is a business’ situation, then they failing to use their talent resources in the best possible way. Not only will thus undermine potential growth, but it will also affect productivity and efficiency. To overcome this, some companies can employ effective outsourcing strategies as a remedy.
Growth through outsourcing can occur when a company’s core team is able to dedicate themselves to essential activities. Despite what many believe, psychologists have shown that multitasking is a myth. Rather than attending to more than one task at a time, we instead are rapidly switching back-and-forth between tasks. Almost universally, this results in a decline in productivity with some reporting as much as a 40% drop. That’s why companies who are stretching their core team too thin can benefit from effective outsourcing strategies. In such instances, growth through outsourcing is realized when top talent can focus on what’s really important…growth!
“Master your strengths, outsource your weaknesses.” – Ryan Khan, Founder of The Hired Group
Leveraging Outside Talent for Growth
Many firms who have decided to embrace an effective outsourcing strategy do so to acquire help basic business processes. Common areas where outsourcing talents are sought include human resources, accounting, marketing, and customer service. Even support in cybersecurity and IT are included among common outsourced personnel. But for businesses pursuing growth through outsourcing, a different perspective is considered. In these instances, firms seek out hard-to-find talent through outsourcing that can give them an advantage. In other words, outsourcing provides easy access to expertise that may otherwise be difficult to secure.
It’s been well recognized that labor markets in some industries are rather tight with a notable skills gap. This is especially true for technology talent who’s up to date on the latest developments. Rather than paying excessive salaries for in-house experts, companies are increasingly realizing outsourcing offers a much better solution. Effective outsourcing strategies that acquire such expertise in a more flexible manner without the long-term commitment has perks. Growth through outsourcing still occurs but without having to offer benefits and top pay. Plus, less time and energy are spent in recruiting, again resulting in better allocation of resources.
“Companies are past the basics of talking about outsourcing and offshoring. Executives understand outsourcing now and want to know how to effectively use it in their organizations.” – Jagdish Dalal, CEO of Corporate Affairs
Instant Access to International Markets
One of the most important growths through outsourcing features involves the specific site of origin where outsourced talent resides. In the past, it used to be that India and a few other countries offered quality talent. But that has changed dramatically in the last decade. Several countries in Eastern Europe, the Philippines, and even Mexico now offer high-level talent. Plus, these are now homes to some of the best foreign universities in the world. Therefore, for companies looking to expand internationally, outsourcing has some additional advantages. Effective outsourcing strategies can actually be used to facilitate new foreign markets.
As multinational enterprises are aware, different countries have varied languages and cultures. By choosing outsourced services in a particular region, companies can gain novel opportunities to expand into new markets. This is an interesting growth through outsourcing approach, but it’s one that works for some firms. In combination with other effective outsourcing strategies, leveraging local talent who know the language and culture can be an asset. Naturally, this may not apply to every business, but for a select few, it reflects a creative approach. Plus, it can save a firm significantly on cultural training and ex-pat incentives when exploring new foreign endeavors.
“Do what you do best and outsource the rest.” – Peter Drucker, Austrian-American Management Consultant, Educator, and Author
Outsourcing as a Means to Acquire Capital
All of the above represent important growth through outsourcing rationales. By adopting effective outsourcing strategies, companies can better meet their needs so they can focus on expansion. Of course, growth usually demands capital, and perhaps the best reason to pursue outsourcing relates to the cost reductions enjoyed. By spending less on routine services that add little value to your product, you gain opportunities to better invest in growth. Regardless of a firm’s situation, some areas nearly always deserve outsourcing considerations. And for modern business today looking to not only compete but grow, it might just be a requirement.
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