Top 9 Reasons for Companies to Shift Towards Outsourcing in 2024

Your workflow has slowed down with slim chances of improvement, and you don’t know why. Look at your core team and look at the bags under their eyes. Businesses often forget that an integral part of running a company is managing their resources and employees effectively, with the promise of meaningful rewards for their efforts. Instead, many businesses crumble under the pressure to perform because their team is burdened with multiple tasks simultaneously. Uplifting this weight from them is one of the primary benefits of outsourcing. How can you ensure that your core team is focused on their primary tasks and that the staff augmentation for specialized tasks is handed over to other experts without depleting revenue? One word: Outsourcing.

What is Outsourcing?

When a business needs to manage its operations beyond the scope of its internal team, it can leverage the expertise of professionals who can take over the additional responsibilities of certain business factors. Outsourcing is engaging third-party service providers that lighten the load of your core team and take on specific business functions so your team can focus on core competencies. These functions typically range from IT services, customer support services, accounting and bookkeeping, revenue health cycle management, and various administrative tasks.

There are various forms of outsourcing depending on your specific business needs. It would help if you determined what business functions need to be outsourced to third-party service providers and then scouted suitable people to manage those functions. Most companies prefer to hand off their secondary operations to third-party vendors in their area or vicinity, while other companies, including big names, capitalize on the cost-saving benefits of offshore outsourcing by engaging offshore specialists to handle their secondary business operations and save on onboarding, training, and infrastructure.

To further clarify the process, the next anticipated question is, what is an outsourcing company? It is a remote staffing company that recruits and engages third-party service providers to extend their services to businesses that need to augment their business functions and improve their internal operations by rerouting their core team’s focus on their primary responsibilities. These companies have a repository of remote, nearshore, and offshore talent that can be harnessed to aid companies in reaching their business goals faster and more cheaply. They recruit professionals with extensive experience to work with a company’s core team or on their own to expedite business functions so the company can grow and explore more scalability options. Inversely, some remote staffing agencies facilitate companies with an offshore team that works as an integrated resource for the company’s core team, known as offshore insourcing. This unique outsourcing model, through integrating offshore talent with core business teams, is a risk-free, high-reward strategy gaining traction in the world of outsourcing and business development.

Read more about Offshore Insourcing here.

Why Do Companies Outsource?

Outsourcing has saved companies millions of dollars in recruitment and onboarding with the added benefits of gaining incredibly competent talent. A study by Deloitte found that 78% of responders felt optimistic about the impact of outsourcing on their business. Among the biggest names in the corporate world, giants like IBM have been leaders in outsourcing for years now, with most of their IT support and manufacturing running on outsourced talent from top offshore locations like Pakistan and Mexico. Google is another credible example of the success of the outsourcing model. It has been leveraging outsourcing for various tasks like software development, content creation, and customer support, and it’s safe to say that it has gained quite a hefty benefit from it.

The abundance of competent IT talent available in offshore locations is a major driving force in the growth of employment outsourcing. It has been reported that about 92% of G2000 companies, which represent the largest businesses globally, reportedly use IT outsourcing. Such a whopping figure is a testament to the fact that there are substantial benefits to hiring offshore talent and letting your secondary business functions be handled through outsourced services and outsourced service providers.

But what is the benefit of outsourcing? It is a low-risk alternative to hiring expensive talent that is half as competent. Companies know the value of their investment and recognize that talent extends beyond borders, which is why every time they need to outsource business functions to a third-party service provider, they jump at the chance to explore nearshore and offshore outsourcing. In the context of the benefits of outsourcing, its location, location, location. By shifting the focus from first-world talent to offshore talent, primarily in the developing world, companies can cut down on the cost of hiring and retention along with other factors. Here are some less-talked-about pros of outsourcing:

• Risk mitigation: Companies know the risk of high turnover, and retaining the knowledge and expertise of offshore staff reduces the risk of disruptions caused by internal staffing changes.
• Government incentives: Most countries would offer special economic zones with benefits for outsourcing companies that large companies can capitalize on.
• Preventing External Threats: The threat of cyberattacks and data breaches can be mitigated by outsourcing, which means having a separate team handling specific functions.
• Increased scalability: Businesses can quickly scale up and down with outsourced talent without fearing losing main business assets like long-term, indispensable employees.
• Employee benefits: Outsource services are ideal for outsourcing employee benefits as they can work for higher salaries with reduced responsibilities and flexible working hours with the adage of remote working possibilities that most clients prefer.

How Does Outsourcing Help a Business Grow?

Businesses need to ensure their core functionalities remain unscathed by institutional changes made at various tiers of the company. They must also create strategies to grow and expand with minimal blow to their revenue or cash flow. Outsourcing allows a business to spend less and gain more, in simple words. Think of a clothing store in the U.S. like Zara that gets its premium cotton apparel from Bangladesh. They acquire quality material while maintaining their financial resources in sourcing. Companies that hire offshore outsourced talent, especially for IT or customer support, gain valuable outsourcing services and talented professionals without compromising quality while minimizing costs. Cost is not just a savings strategy; it is pivotal in helping businesses grow faster with cheaper but quality resources in the form of employment outsourcing. A local factory worker will cost them twice as much in cost and talent, while outsourced employees will not.

Scalability is also a privilege enjoyed by foresighted companies that know where to pinch their pennies. Outsourcing employees saves costs on hiring and onboarding as well as employment infrastructure such as software, hardware, and secure workplaces and employee training, which is poured directly into business ventures that bring in more capital and investments for large companies by outsourcing employees through remote staffing agencies to recruit and train remote outsourced employees.

However, from the perspective of SMBs (Small to medium businesses), the benefits of outsourcing are even more significant when it comes to scalability. Working with a tight-knit group is typical for small companies, sometimes a one-person army.

• A study by Bankrate suggested that 42% of small business owners work 50 hours per week, suggesting they are overburdened and under-resourced. You can put two and two together and figure out that it is easy to grow a small business through outsourcing and hiring.
• Combining the power of talented offshore outsourced employees and putting them with the limited resources of small businesses and outsourcing employees becomes the ideal scenario for small businesses. They can scale and grow their business exponentially by acquiring a business outsourcing process to streamline their business functionalities.

Flexible Business Process Outsourcing Services

Another common reason companies prefer to hire outsourced employees is because it allows for business flexibility. Now, what is the meaning of business flexibility? Hiring a remote, nearshore, or offshore professional or team to handle your specific business functions allows you to handle your business more creatively. Outsourcing employees will give you access to their expertise beyond the typical 9-5 schedule through varying time zones of nearshore and offshore outsourced employees. This means you have more control over your business through flexible timings and accessibility.

With outsourcing business services, you are gaining the advantage of business flexibility, such as variable costs. You only must pay for the services you acquire from outsourcing employees without factoring in the price of workplace architecture, work infrastructure, including software and hardware, leaves and vacations, and fully billed workdays. This setup harks to the importance of flexibility in business through outsourcing employees. The cost saved from retaining one employee can be divided among two or three specialists who can handle multiple business functions without needing any of these amenities or facilitations, allowing you to explore diverse projects providing – you guessed it – business flexibility.

How a Company Benefits from Top Talent

We’ve discussed the much-celebrated affordability of offshore talent. Let’s shed light on the benefits of hiring affordable, top talent. The examples above of tech and finance giants like IBM and Google emphasize the importance of outsourcing top talent.

• There are countless other examples, such as Amazon using Indian IT backend support staff to run its cashier-less store chain like Amazon Go. This efficiency is only possible with talent acquisition outsourcing, which can handle the fast-paced needs of a business like Amazon. Talent from offshore locations like Pakistan and India can streamline innovative processes like Amazon’s stores with fewer challenges than domestic staff in the U.S.

Unlike domestic talent cut from the same skill cloth, remote and outsourced talent possesses strong analytical and critical thinking skills. These skills allow them to make better decisions using their deductive skills to analyze challenges and develop workable solutions in less time.

• Companies like Microsoft and Google prefer hiring quality talent over cheaper talent, which they get in high-proficiency, skilled IT and software development professionals through outsourcing employees from offshore locations like Pakistan and India.
• Most businesses value collaboration and growth over crunching numbers and doing meaningless tasks. To hit business goals and produce measurable results, most companies encourage diversity and inclusivity in hiring because they believe bringing fresh blood into their organization through outsourcing employees allows them to build newer connections, embrace fresh perspectives, and grow their team’s skillset, expertise, collaborative spirit and send of community. Outsourcing employees positively impact company culture, nurturing and consolidating the positive impacts of diverse backgrounds in the organization.

Maintaining Focus for Firms

The use of outsourcing allows the firm to focus on its core competencies. Various firms struggle under the weight of managing their internal operations, while additional responsibilities like accounts receivable management, bookkeeping, and debt collection become a hanging sword above their heads. But suppose firms can realize the qualities of offshore, outsourced debt collectors and know how to recruit and hire the best specialists in accounts receivable. In that case, they will have a much easier time focusing on growing their business and having their team focus on their core responsibilities in management and business development.

• For example, outsourcing customer service can substantially benefit a company that runs an extensive business around customer service, from entertainment subscription channels to SaaS companies. Offloading their customer support to the right outsourced employees will allow these companies to invest in innovative technologies, strategic development, and community outreach to enhance their business and improve people’s lives. Now, that’s the kind of focus every company wants!

Reduced Labor Costs Through Outsourcing

And finally, we arrive at the most venerated reason for companies to outsource employees – cost benefits. There are studies res, research, and opinion pieces abundantly explaining how cost saving is the number one source of outsourcing’s popularity. Companies worldwide and in the U.S. have been reaping the benefits of offshore outsourcing by acquiring top talent from offshore, nearshore, and remote locations to facilitate their business functionalities.

• A Clutch study revealed that over one-third of small businesses outsource at least one business process. The most common reason for this forever-growing trend is the cost-saving benefits that come with outsourcing cheap, quality, and flexible talent that would be hard to find otherwise in domestic settings, especially in the U.S.

While we know that large corporations rely on the cost-saving aspect of outsourced employees to cut down their labor costs, small businesses practically survive on outsourcing services to balance their business operations and effectively grow their influence with the help of employee outsourcing.

• Imagine the cost of legal advice and counsel imposed on small businesses for managing disputes, and now imagine the cost-saving benefits of hiring legal assistance offshore. Similarly, many small businesses need help to grow their business due to a bottleneck in their revenue stream caused by backed-up accounts receivable. Now, weigh the advantages of outsourcing skilled debt collectors to manage their collections and debt recovery. The costs are astronomically low, and that’s why reduced labor costs and heightened skill are the perfect combination that’s neatly packed in the shape of outsourcing services.

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Infrastructure and Material Cost of Outsourcing

The cost of hiring and retaining outsourced talent is almost half of what you would incur with domestic, in-house talent. Look at the way you set up a company and weigh the amount of time and money that goes into developing an office space and devising staffing strategies for domestic, in-house employees. The cost is nominal if you weigh that against recruiting, onboarding, employing, and retaining offshore, nearshore, or outsourced employees. Everything can be managed through virtual communication channels; there is no need to facilitate an office space and amenities, and a fully remote workplace needs no physical infrastructure to sustain the workforce. Those are some ways that outsourced staff costing positively impacts your business, such as cutting down on material costs and infrastructure for maintaining and retaining outsourced employees.

How Does Outsourcing Enhance Customer Satisfaction?

Customer support is an integral part of most businesses, especially the ones that are customer-centric and require constant feedback from customers to improve their products and service offerings. This list would include everything from Netflix to Nike.

• It has been estimated that U.S. businesses lose up to $62 billion due to poor customer experience. This shocking statistic reveals a prevalent problem and plausible correlation between a lack of quality customer support and business deficits.

The effects of outsourcing on customer satisfaction are considerable when you realize how often you call tech support or helplines to fix your computer or appliance and receive lackluster and unhelpful information. Outsourcing top talent in customer support can allow your business to improve its client-facing side and grow its customer base by simply investing in better customer support, a top export of offshore locations like India, Pakistan, and the Philippines, among many outsourcing havens.

Outsourcing Promotes Decreased Operational Risk

A house is on fire, and there isn’t enough water – that’s the case with businesses that cling to their perception of utilizing their core team for all kinds of deliverables, responsibilities, and challenges. However, outsourcing some of those challenges to third-party service providers is like finding a fire hydrant when needed. To cap off all the various tangents explored in this article, a recurrent factor in the popularity of outsourcing is the decreased operational risk. Hiring a vetted and qualified professional offshore or remote can allow a company to run its operations more effectively. It helps mitigate the operational risks that otherwise run rampant when working with an over-burdened and resource-less team. However, outsourcing your additional business functionalities to qualified professionals can considerably lower the risk of your cauldron boiling over and causing long-term damage to your business and your customer relationships.

Remote Scouts – The Oasis of Outsourcing Remote Talent

Outsourcing the perfect employee is a dream many businesses have, and many don’t realize it because they underestimate the difference a good outsourcing firm can make to the quality of talent you get. Remote Scouts is a remote staffing agency that exceeds expectations in outsourcing offshore, nearshore, and remote talent for all kinds of businesses, regardless of their scale and business goals. Big or small, Remote Scouts know how to find, train, and integrate the best-outsourced employees to enable you to grow your business beyond the confines of what you could have aspired. And within that promise, we ensure that we outsource employees who align with your company culture and goals without going through the hassle of sifting resumes and incurring turnover.

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