According to ISG, the global outsourcing market is valued at $92.5 billion in total contract value.
Any business wants to reduce operational costs without compromising efficiency. Minimizing costs and maximizing work efficiency are crucial elements a company must rely on to achieve steady business growth.
So, how to do that?
Globally, thousands of organizations are relying on outsourcing business services to handle business operations smoothly while expenses remain within budget and efficiency is not compromised. These organizations rather focus on strategic planning more than engaging employees, looking after payroll, or managing facilities. Outsourcing not only cuts the expense of salary but also saves overhead, training, and maintenance costs related to human resources.
Currently, the global outsourcing market is dominated by IT outsourcing (ITO) and business process outsourcing (BPO).
IT Services like cloud computing services, web hosting, cybersecurity, and data backups are the most in demand worldwide.
Again, payroll, HR services, marketing, customer service, logistics, facility management, and business development services are the most common BPO services in demand.
In a world where the economy is interconnected and changes fast, and businesses are facing competitive pressure globally, outsourcing services is not only saving costs but also acting as a strategic plan for boosting growth.
In this blog, we have shed light on the facts that talk in detail about why and how outsourcing services would be proven beneficial for any business, regardless of size and nature.
But before going straight onto the reasons, let’s talk about people outsourcing first –
What is People Outsourcing?
The practice of hiring external workers/employees or companies to handle specific operations or business functions instead of getting them done by in-house human resources is known as People outsourcing.
Outsourcing can be done in many forms, like hiring freelancers, contractors, or third-party service providers. Generally, operational supports for customer care, IT services, accounting, or marketing services are commonly outsourced, which is commonly known as Business Process Outsourcing, AKA BPO.
From local or offshore sources, depending on the service demand and budget, by outsourcing the service, any organization can reduce costs, get better service than expected.
Having said that, let’s have a look at the 7 core reasons for people outsourcing that assist in making business growth –
1. Convenience of Skilled Manpower
According to Deloitte, “70% of businesses outsource to gain specialized expertise unavailable in-house.”
Outsourcing services pays off when it comes to getting done professional or specialized niche jobs.
The geographical border is no longer an obstacle to reaching out to the skilled workers. Many organizations rely on outsourced service providers for the immediate supply of services. Services like AI prompt generation or saas specialisations are commonly outsourced in offshore markets.
2. Reduction in Operational Overhead
Reduced expenses for hiring people through outsourcing are real! Southern Asia is a hub for reduced manpower costs.
Studies show that nearly 56% companies cut labor costs through outsourcing skilled professionals. According to a 2024 report by Statista, operational costs can be reduced by 60% through outsourcing employees or services.
This is simply clear that there are many operational and overhead expenses eliminated once a team of workers is not kept in-house, for associated expenses appear once manpower is hired. For example, no recruitment costs, no office space, maintenance and equipment costs, hourly payments, etc, are definitely going to save up a huge amount.
3. Growing Scalability and Flexibility
Many companies require flexibility due to their operational pattern. These businesses may unexpectedly face soaring demand for work due to changes in incoming orders or changes from the client’s side. In such scenarios, businesses can have extra benefits by outsourcing services.
Outsourcing the remote workforce provides a strategic advantage over keeping permanent workers, who might not go beyond a certain limit due to a smaller workforce. Scaling promptly during the peak time of running a project is possible through outsourcing a favorable number of workers for a time period, besides permanent in-house workers.
On top of that, the flexible nature of the payment procedure for remote workers is another reason for the growing demand for outsourcing by companies.
4. Focus on Core Goals
It is always wise to leave the manual tasks for the automated system and use the company’s talented brains in productive and innovative tasks. Many companies, like financially operated companies, don’t waste their time on calculating payroll tasks; rather, they engage their in-house talents in mitigating risk assessments, strategic development programs, and initiatives of the organization.
It is obvious that when employees engage in repetitive tasks that don’t require brain work, they lose productivity and suffer from burnout. This is one of the main reasons for preferring outsourcing services for short-term or long-term big projects. Outsourcing enables organizations to balance workload among their employees and outsourced workers and delegate specific tasks to experts.
5. Delivering Jobs Faster
When focusing on the core goal is expected at the same time time management is crucial and can’t be overlooked. In this era, competitiveness also depends on how speedy a business operation can be. Outsourcing opens the opportunity to enter into a faster business operation process that you might not achieve within your organization in some cases.
By outsourcing external expertise, organizations can take advantage of the global time zone, which would allow them to utilize teams around the clock. Additionally, the immediate availability of expert workers speeds up the production when the same tasks might take longer to deliver due to the unavailability of a proper framework and structural setup in your organization. For example, hundreds of companies from Dubai, Saudi Arabia, outsource MVP for UX design from South Asia, many of whom are startups.
6. Global reach
Global reach is a great opportunity to tap into the supply of vast technological support, infrastructural support, and technical and innovational support. Outsourced partners can help with knowledge gained from working with diverse clients worldwide, innovative technical insights at an economical remuneration, and no extra office politics.
For driving innovation global outsourced team can be proven extremely beneficial. For example, in the cloud migration industry, companies pair up with certified companies to have faster results. A study claims that, compared to an in-house IT team, outsourced solutions come with 40% fewer errors.
7. Improved Customer Support
To improve customer care support and relationship, outsourcing an entire team for handling clients’ inquiries, providing client service, and supporting clients 24/7 is commonly seen worldwide. Services like call center support have been updated to automated AI technology in many countries, like Philippines.
Outsourcing customer care can accelerate the growth of a business through improved client relationships by providing round-the-clock professional support for its clients.
Key points
- Outsourcing is a great option for businesses to operate efficiently and doesn’t require a hefty sum of money. This offers an opportunity to focus on the core business and delegate side hustles to the outsourced team.
- For a small business with great potential that is staying low due to a lack of connections, it can team up with an offshore outsourced team. This partnership would bring expert solutions, advanced technical support, and a global standard of solutions into the business.
- Through outsourcing, companies can scale up or down their size while sharing the workload with an outsourced team. Leveraging productivity through shared workload and outsourcing expert solutions to escalate the delivered outcome.
- When the global business environment is highly influenced by outsourcing practice, it is wise to adopt this practice for every business, as per their needs and scopes.
FAQs on How Outsourcing Drives Business Success
Is Outsourcing Only for Large Businesses?
Not at all. Small and mid-sized businesses benefit the most, as outsourcing allows them to stay competitive without massive overhead.
Which Business Functions Should I Outsource?
Commonly outsourced areas include business process outsourcing (BPO), IT support, software development, digital marketing, HR, finance, and customer service.
How Can I Choose the Right Outsourcing Partner?
Look for providers with domain expertise, a track record of reliability, clear communication protocols, and scalability options aligned with your goals.
How Do I Know If My Business Needs Outsourcing?
Evaluate your in-house capabilities, workload, and growth objectives. If you struggle with high costs, lack specialized skills, or need to scale quickly, outsourcing can help.
When your organization is failing to meet the deadline or becoming overwhelmed by workload, yet you are getting good projects from reliable clients that you can’t afford to lose, that is the right time to outsource an expert team to share the workload and enhance the expertise of your team.
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