5 Reasons Why Companies Choose To Outsource Work
Did you know that 66% of businesses in America outsource at least one department? But that’s not all! Economist Nicholas Bloom estimates that 10% to 20% of U.S. service support jobs, including roles such as software developers, human-resources professionals, and payroll administrators, could be outsourced overseas in the next decade.
Are you wondering why these companies are making this move? Why do companies choose to outsource work? We'll answer this question with five reasons.
Top 5 Reasons Why Companies Choose To Outsource Work
Companies are constantly looking for ways to be more efficient and cost-effective. One strategy they're turning to is outsourcing.
Outsourcing is when a business hires another company to do some of its work. This can be handling calls and emails from customers or its entire human resource function instead of doing it themselves. It's a big deal globally, with people spending about $731 billion on it.
Let's explore the top 5 reasons businesses decide to hand over some of their tasks to external teams.
1. Cut down on labor costs
Imagine growing your team without the costs looming over your head. Outsourcing does just that. It lets you add talent to your workforce at a fraction of the cost of hiring locally. This is especially true when it comes to labor and operational expenses.
A good example is working with MultiplyMii. Want to build your eCommerce dream team? We can connect you with Filipino remote experts and help you save as much as 84% on eCommerce roles.
By working with outsourced teams, you can keep up with your rapid growth while keeping your spending low.
2. Save time, money, and effort in hiring
Bringing a new employee on board can cost a company $7,500–$28,000 in hard costs. These are your background checks, job postings, ads, onboarding materials, and training.
On average, the hiring process can take up to six weeks, depending on the role needed, the number of applicants, and the experience of your hiring manager.
But here's the good news: Working with a remote staffing company like MultiplyMii takes the hiring hassle off your plate. You save money and free up your time and resources for what really matters in growing your business.
3. Concentrate on what matters most
Hand off the smaller tasks to zero in on your business's core activities.
When you have teams handling tasks like sales and customer service from afar, you can pay more attention to big-picture strategies without getting bogged down by your day-to-day tasks.
This strategic move will not only set you apart from your competitors but also help you maintain a better balance between work and life.
4. Support growth and reduce risk
Getting through the first five years is tough for any business, with statistics showing that only 55% of companies make it past this milestone.
Companies use outsourcing as a safety net to deal with industry changes. It ensures that the most important jobs continue to go well, while you and your employees can stay flexible and devise new plans and strategies if necessary. Moreover, if something goes wrong, it's not only your problem—your outsourcing partner helps manage and fix it.
5. Leverage specialized tools and software
Outsourcing also means your teams can access to the latest tools and software they need to do their jobs well. This includes offices and resources to specialized software, making it a big draw for outsourcing companies
Understanding these key reasons explains why outsourcing has become a popular choice for businesses aiming to stay competitive and agile in today's fast-paced market.
Why Is Outsourcing Important for Big and Small Businesses?
Now that we’ve discussed the top reasons why companies outsource, let’s be more specific. Let's see why big companies and smaller ones decide to outsource.
Large organizations: Efficiency and expertise
For big businesses, outsourcing is key to efficiently managing all their different tasks. They often delegate non-core functions like project management and administrative tasks to external teams.
Outsourcing allows large corporations to focus on their primary business goals. Because their operation is big, they often have jobs that aren't really their main focus.
Moreover, large organizations are more likely to seek out experts through outsourcing. This allows them to keep up with emerging technologies and trends without spending too much time on it.
With outsourcing, companies can bring new products or services to the market faster, allowing them to compete with their competitors.
SMBs and startups: Cost savings and specialized knowledge
Outsourcing is a means of cost savings for startups and small and medium-sized businesses (SMBs). Because small businesses usually operate with tighter budgets and less room for growth, these savings are crucial.
Additionally, small businesses often need expert help, which they don’t have in-house because they haven’t been around for a long time. Outsourcing lets them get this expertise without hiring someone permanently, which can be expensive.
That is unless you can access to the top 5% of remote Filipino talent. At MultiplyMii, save on labor costs without compromising on work quality!
Outsourcing offers a flexible and efficient solution for both large and small businesses to manage their operations more effectively.
Common Types of Outsourcing
Outsourcing can be done in different ways, and each one helps with different things you may need.
Let's take a closer look at the types of outsourcing that companies use these days.
Business process outsourcing (BPO)
BPO is all about outsourcing specific non-core business tasks to external partners. These can include customer support and human resources, finance and accounting, and procurement.
By outsourcing these functions, you can focus more on your core activities while benefiting from the expertise and efficiency of specialized service providers.
Remote staffing
Remote staffing is when you hire experts who can work remotely rather than in a traditional office setup.
Companies opt for remote staffing because of the flexibility it offers, along with bigger cost savings and higher retention rates. You can work with remote staffing experts like MultiplyMii and allow us to handle the whole recruitment process, from crafting the job description to onboarding.
Remote staffing aligns with evolving work preferences, providing a win-win situation for you and your employees.
Information technology (IT) outsourcing
92% of G2000 companies use IT outsourcing and there are good reasons for this.
With IT outsourcing, companies let IT professionals handle tech tasks. This covers services like making software, managing computer systems, keeping networks running, and giving technical help.
According to a study by Deloitte, businesses outsourcing their IT functions can achieve operational cost savings of up to 40%. ITO helps businesses stay up-to-date with emerging technologies and innovations without spending a ton on their own IT departments.
Knowledge process outsourcing (KPO)
KPO goes a bit deeper into outsourcing, concentrating on tricky tasks that need a lot of special knowledge.
Think research, data analysis, and other smart thinking jobs—these are what KPO usually handles. This kind of outsourcing helps you get global knowledge and expertise you may not have in your team.
Manufacturing outsourcing
This kind of outsourcing is quite common in industries like electronics, clothes, and cars, where companies hire outside suppliers to make their products.
Manufacturing outsourcing helps you cut down on costs, get specialized makers, and be more flexible in making more or less products as needed.
Through these various types of outsourcing, companies gain a competitive edge in today's fast-paced business environment.
Things To Consider When Hiring an Outsourcing Company
Here are key factors to weigh in on when hiring a BPO company to ensure you make a well-informed decision.
Explore their impact on the market
The duration a BPO company has been in operation can tell you a lot about its stability and experience.
A company that has stood the test of time is likely to have refined its processes, encountered and resolved numerous challenges, and built a solid foundation of knowledge. It's a good indicator of reliability and the ability to adapt to the evolving market demands.
Find out their specialized know-how
It’s essential to assess whether the outsourcing company has expertise in the specific services you need.
Look into their track record to see if they have a history of handling tasks or projects similar to what you're outsourcing. Relevant experience ensures they understand your industry and can meet your expectations efficiently.
Learn the quality and success of their past projects
Investigate the quality and outcomes of the projects the BPO company has undertaken.
This includes looking at case studies, success stories, or any awards or recognitions they have received. High-quality projects and successful outcomes are strong indicators of their capability to deliver results that could exceed your expectations.
Check their online presence
Explore their website, social media profiles, and any published content to get a sense of their expertise, thought leadership, and how they engage with their community.
An outsourcing company’s online presence can reveal much about its brand, values, and professionalism. A strong, positive online presence is often a sign of a company that takes pride in its work and values transparency.
Listen to what their clients are saying
Consider reaching out to some clients directly if possible, to get a firsthand account of their experience with the BPO company.
Client testimonials, reviews, or case studies can provide insights into the company's working style, communication practices, and ability to deliver on promises.
Taking the time to evaluate these factors will help you choose a staffing partner who aligns with your business needs and contributes to your long-term success.
Drive Business Scaling with High-Impact Hires
Catapult your business to success with the power of high-impact hires.
Consider partnering with MultiplyMii, a trusted remote staffing firm.
With a proven track record of assisting over 250 satisfied clients in finding their ideal candidates, we specialize in powering businesses with remote Filipino talent.
Our expertise lies in providing top-tier professionals who not only meet but exceed expectations, enabling your business to thrive and scale seamlessly.
Let MultiplyMii be your trusted partner on achieving unparalleled success through high-impact hires.
Book a discovery call today, and let’s set your business up for success!
