Does Outsourcing Help or Hurt Businesses?

By Cory Levins

Outsourcing can be an enormous undertaking and shouldn’t be taken on without serious consideration of your options. Whether it benefits a business depends on many factors since each company is unique.

The United States is one of the fastest growing countries for outsourcing. Internet contract work that entails hiring workers for short-term remote jobs (like those in the shipping industry) is one of the fastest-growing outsourcing fields. The U.S. has outsourced approximately 14 million jobs.

Reasons Companies Outsource

There isn’t necessarily one right answer to the question of whether outsourcing helps businesses. To decide if it is essential for you, first understand why companies outsource in the first place.

Higher Overall Revenues

Put directly, companies outsource to lower expenses and increase production. Outsourcing saves money on operational costs and labor, which can substantially save and an enhance overall profit.

Additional Time to Focus on Performing Your Job

Your primary job is to profit from your service or product, not to make sure literature or products get to the right place at the right time. That is where outsourcing comes in; it can be the resource that frees time and saves benefits for your business and your customers.

Shared Knowledge

Response services and fulfillment are important aspects of all businesses. Outsourcing to people who know how to get your products and services where they need to go promptly is a sound business decision.

Faster Service

Outsourced services often work more efficiently than those in-house. Usually, this is because the outsourcing company has efficient procedures and adequate staff to screen requests, process orders, and deliver them faster.

Shifting Priorities

Outsourcing also gives you the opportunity to adjust priorities. Whether this means taking on more projects, beginning something new you have never tried before, or changing directions, it is all easier if you do not need to focus on product fulfillment.

A Greater Infrastructure Supporting You

Your business framework may not be best suited for growth or dealing with problems when they arise. Outsourcing to an expansive structure gives you room to maneuver.

Save for a Rainy Day

With outsourcing, you only pay for what you need, and the money saved could give you the rare occasion to put some aside. In turn, money invested assists in a safe and secure business in the future in case any problems arise.

More Flexibility

Outsourcing your fulfillment, storage, and response solutions means you do not need to pay people when business is slow or go through the arduous process of hiring temporary staff when demand escalates.

Risk Reduction

All companies run the risk of a drop in operational efficiency during periods of high staff turnover. If several of your warehouse staff coincidently left all at once, training new staff to the levels required to sustain production would be time-consuming and costly. With crowdsourcing, the risk is considerably reduced, if not eradicated.

Improved Customer Satisfaction

When calls are answered more efficiently, problems with the process are routed to the proper personnel, and products are delivered quicker, your customers get a better experience. When your clients have a better experience, they are more likely to continue their business relationship with you.

How Outsourcing Helps Businesses

First of all, there’s no need to hire more employees. This means that when a company outsources their jobs, you pay workers as contractors. They are not considered employees, so you do not have the added expense of benefits and excessive training.

Secondly, your company has access to a larger pool of talent. Many times, when businesses hire employees, they only have access to local talent. Outsourcing provides access to contractors all over the world. If specific help is what you need, expanding your search may be the solution.

Another way outsourcing helps organizations is that it lowers the cost of labor. While you do not want to trade quality for price, outsourcing allows you to get the best of both worlds. Finding the right person for the right price is easier in a global field.

How Outsourcing Hurts Businesses

Like any other aspect of the business world, there are cons to the outsourcing process.

For one thing, there is a lack of control to some extent. You may provide general direction as to what you want to achieve, but you must relinquish some control. Part of this is because you are hiring people as contractors instead of employees, and they are not working on site for you to manage.

Problems with communication sometimes occur, too, which may be one of the most significant disadvantages. It is essential to know what time zone the outsourced person lives in compared to where the business is located.

Does the contractor use Apple products or PCs? Do they have a reliable internet connection to support the work they will be doing?

Communication is integral to business success. Many employees in the U.S. report they do not participate at work as much as they should.

Problems with quality occur when you do not receive the caliber you expect. Quality expectations should happen up front so you can avoid disappointment.

Outsourcing and Company Culture

Outsourcing significantly impacts company culture. Take steps to ensure it does not have a negative impact on workplace culture.

Since positive work cultures improve productivity, look at areas that may be affected by outsourcing.

Employees sometimes feel they are being replaced. They become confused when specific tasks are outsourced. It also adds challenges to the daily workflow of the business.

The process requires a certain amount of transparency. Informing current employees about outsourcing plans and how it affects them goes a long way to ensuring a positive company culture.

Competitive Business Strategies

More often companies are turning to outsourcing to make their daily operations more affordable. Whether this harms the economy is a great source of debate. The average American views outsourcing negatively. Eighty-six percent felt that losing jobs overseas only added to the economic crisis in the U.S. at its height.

Only 16 percent of employers say they would move outsourced jobs back to their home base. Those that would cite the poor performance of the offshore supplier as the reason for the move.

Global Outsourcing Wealth

In 2014, the industry generated $507 billion worldwide. The most significant share, at $381 billion, was electronics manufacturing.

The average income of outsourced workers depends on many variables, like what type of industry and the location of the worker. A Chinese worker in the manufacturing industry earns approximately $1.36 an hour while one in America makes $23.32.

Regardless, it seems outsourcing is here to stay. The business world will remain competitive, and companies will continue to find more cost-effective ways to run their businesses. Outsourcing cuts business costs considerably and therefore is an efficient way to do business.

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Cory Levins
Cory Levins serves as the Director of Business Development for Air Sea Containers. Cory oversees the development and implementation of ASC’s internal and external marketing program, driving revenue and profits from the Miami FL headquarters.

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