Sometimes the best way to grow a business is by looking outside the organization.

While it might make sense to establish a skilled in-house team, outsourcing work can be a strategic move, especially as companies face labor shortages and increasing production costs.

Outsourcing is a cost-effective option when your business needs to scale up market share, staffing, and production rapidly. There are many advantages of outsourcing, and, if done correctly, it will help you maximize the performance of your staff by making them more efficient and allowing them to focus on their core responsibilities.

This blog post will take a look at eleven benefits of outsourcing work and how getting external help can be the right choice for your business.

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1) Reduce your labor costs

The single most significant cost for most businesses is labor. Salaries are constantly increasing, and the weekly paycheck doesn’t include the cost of total compensation, such as training, health care, travel, and other perks. Infrastructure, technology, and equipment costs can also impact your bottom line. 

However, outsourcing can significantly reduce or eliminate many of these expenses. Contractors don’t require a desk or office space; they generally do not receive additional employee benefits. It’s also easier to onboard them as they are typically specialists hired for specific roles or purposes.

Here at Hubstaff, we often turn to our pool of contractors as a means of scaling up. If a full-time position opens up, we look to our trusted contractors first. In this case, outsourcing streamlines the process and becomes cost savings in hiring.

There is built-in flexibility through outsourcing as well — in many situations, you only pay for the work you need. If you have 40 hours of work one week and only 15 the next, you’ll pay only for hours worked. This flexibility will help you better budget tasks or projects while maintaining financial targets.

Outsourcing also allows you to tap into more affordable talent pools — hiring a designer or developer from New York City or Los Angeles will be more expensive, as their cost of living is much higher.

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2) Improve team efficiency through outside expertise

Turning to an independent contractor allows you to hire someone with many years of experience. They will bring expertise to your company and may even improve business functions while introducing new initiatives. That way, you won’t have to break in a rookie or develop a new division within your company, which takes time and money. The experts will help you be more efficient out of the gate, boosting productivity and efficiency.

For example, during the pandemic, there was a forced evolution of e-commerce for retail. Many of these stores may have had a rudimentary online presence pre-2020. But with health restrictions, many companies were forced to bolster their online stores on the fly. By going to a contractor, they were able to make the transition a lot faster. These factors allowed companies to sell their products to a broader audience even after lifted restrictions.

An experienced work from home remote employee provides benefits through outsourcing tasks

3) Grow on a budget

Outsourcing can help entrepreneurs grow their businesses without breaking their budgets.

Take public relations, for example. Some companies, especially small and medium-sized businesses, do not need a full-time PR or communications department. However, they still need these professionals to help run social media campaigns or handle news media requests on a one-off basis. 

Outsourcing to a cost-effective firm that specializes in public relations might make more sense than building your in-house PR team from scratch. You can apply this strategy to human resources, bookkeeping, legal, or other departments that become more important as your business grows.

4) Focus on what’s important

As an entrepreneur, you have a goal and vision for your company. You’re an expert in the product you’ve built or the service you’ve developed. So your focus should be on doing whatever it takes to grow the business rather than administrative tasks.

Outsourcing services allows you to keep your focus on the core business. By contracting out time-consuming non-core areas of the company, like IT or administration, you can concentrate on more meaningful work that will significantly impact your business operations.

5) Access to global talent

It’s a competitive market for skilled labor as companies crank up their recruiting efforts to fill workforce shortages. Both startups and established businesses are struggling with this challenge.

Scaling up right now is incredibly difficult, and outsourcing can play a critical role in filling this void, particularly in the short term. Instead of recruiting candidates to relocate to you, you can tap into companies and freelancers worldwide that specialize in the skills you require.

Even if your eventual goal is to have a complete in-house team, outsourcing can help you get there quicker by helping you save until you can make more permanent hires. Read about differences between in-house and outsourcing.

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6) International expansion

In some cases, outsourcing can help expand your company’s reach overseas or into neighboring countries.

Taking advantage of a remote and global workforce makes gaining access to new markets more accessible and less expensive, especially if you can bypass many infrastructural challenges needed to set up a physical location.

By outsourcing, you can avoid the cost of relocation packages for employees and other expenses, like equipment and rent, when setting up a new office.

7) 24-hour production

A global talent pool means you can overcome the eight-hour workday. A traditional work environment often runs only from 9-5 in your time zone. By outsourcing tasks and with proper planning, there is no reason production, IT, or customer support has to shut down.

By hiring freelancers in other time zones, you have the opportunity to create a 24-hour production cycle. This means managers can have completed work waiting for them in their inbox when they start the day, and you get projects back to clients faster than ever before.

An outsourced freelance remote professional works from his computer at night

8) Increase productivity

When your team gets slammed, outsourcing can be a lifeline. Some businesses go through predictable busy seasons, and other times they cannot expand their permanent workforce fast enough to keep pace with demand. Outsourcing can help your employees stay on task when their workloads increase. 

There are contractors or freelancers to handle just about every type of work. They can be brought on to pick up responsibilities outside the core scope of your work. For example, suppose your business is ramping up for a social media campaign. In that case, you can outsource this work rather than adding it to the plate of an already-busy communications team. This setup allows your professionals to focus on their best work.

Especially in anticipated demand surges, going outside the company can help you cut human resources and benefits administration costs while reducing your reliance on full-time transient team members.

9) Gain a competitive edge

Outsourcing can help small businesses punch above their competitive weight. Companies can maintain a smaller core of employees while accessing resources around the country (or around the globe) that allow them to tap into a higher level of experienced talent or offer more services at a better price than their competitors.

When profit margins are tight, providing better customer service or quicker turnarounds on projects can make a huge difference in client retention or attracting new work.

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10) Third-party contractors are motivated

Outside contractors are motivated to keep you happy. All employees should be motivated — but third-party providers have no security beyond the project they have been hired for or the end of the contract.

If they do sub-par work, they’ll lose out on potential client referrals and testimonials. So it’s in their best interest to perform at their best.

11) Internal staff development

On-site outsourcing can pay dividends beyond just getting a project completed. When you bring in outside experts, it’s an opportunity for your core staff to pick up new skills and perspectives just by working alongside your more experienced hires. Outsourcing is beneficial if you have a younger or developing team.

Outsourced employees have a virtual meeting with team members

Also, your staff will be able to better hone their craft by having more time to concentrate rather than being overworked or trying to tackle responsibilities beyond their primary skill set.

Final thoughts

Outsourcing is finding the most efficient way to run and grow your business. It’s not perfect for every situation, but there are many advantages to developing and retaining your internal staff.

Hiring contractors can help you handle a wide range of challenges while keeping costs under control. Outsourcing can help companies discover new markets or help business owners focus on what they do best.

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Category: Workforce Management