In 2019, the global outsourcing market drastically increased to 92.5 billion U.S. dollars (Statista). As human civilization advances fast in this digital age, work and earnings are changing drastically. The gig economy has expanded over the years. Almost all companies now hire freelancers to streamline their workflow, save on cost, and leverage the best and brightest. According to Statista, in 2020, enterprise spending on cloud infrastructure services grew by 34 % compared to 2019 and reached 130 billion U.S dollars.
Companies started first outsourcing IT services then they expanded to so many other jobs such as data entry, graphic design, writing, social media, digital marketing, virtual assistance, consulting, and even, compliance/ CFO/ CEO- Assist, lately. In today’s digital world, there are very few jobs left that you cannot outsource.
What is Outsourcing?
The term ‘Outsourcing’ means hiring a contractor, who is not an employee in your company to perform a task one time or on a recurring basis. This contractor is usually remote and in other countries that have lower pay rates. Hence, you may also call it “hiring global talent at a lower rate”. Around 300,000 jobs are outsourced annually in the U.S alone (Aptude).
It is not a hidden fact that many companies and businesses are now working online and outsourcing contractors for the job. To corroborate the fact, IBM is the largest outsourcing company globally with a market capital of $105.66 billion and 383,800 remote staff (Insider Monkey).
Why is Outsourcing Effective?
Outsourcing global talent has its pros and cons, pushed by Covid -19 crisis, the gig economy and freelancing have increased in multi-folds. As we delve deeper into a more virtual lifestyle, the world continues to extract more of its possibilities. One of its classic examples is ‘Outsourcing.’
Pros of Outsourcing
The benefits of outsourcing are clear given the fact that a successful business is defined as ‘lower cost and greater profit.’ Outsourcing reduces the huge cost of skilled labor, space to host staff, and lately even the shortage to find skilled labor in your town or even country
Outsourcing for business reduces your cost heavily, not only for high salaries and benefits, but also for leased space cost, furniture, fixtures, and even electricity and water bills.
A global talent pool
It enables you to hire from a pool of talented people virtually anywhere in the globe at, possibly, a much cheaper rate than your local market.
Outsourcing also gives you the opportunity to hire and fire more easily. Thus, mitigating the risk of misfit for the job allotted.
Focus on the core
By outsourcing for less significant tasks, you can focus on the core functions and the strategic goals.
Cons of Outsourcing
With the boons come the disadvantages; there are many risks involved with Outsourcing as well, namely:
● Expectations of service delivery may not be met.
● Security and confidentiality can be undermined.
● Standards may vary between you and the contractor
● It might be difficult to manage renewed people from other cultures and tongues
However, these caveats are manageable when you learn to refine your recruiting processes and communication skills.
How Can you make Outsourcing Effective?
Below are some specific prerequisites for the success of the business through Outsourcing:
● Careful selection of the vendor: Recruiting or selecting the right vendor is the foremost second step.
● Outsourcing the tasks with a clear vision and goals: It’s crucial to chop up the tasks carefully with clear expected outcomes and timelines. It is essential to have the other person understand what you are looking for and how you want your tasks done.
● Leadership guidance: It’s difficult for a new person to understand the company’s goals remotely. Leadership guidance is essential to reduce the chances of misunderstanding that might affect the quality of work.
● Open Communication: Communication is one of the essential prerequisites to get the best. Be transparent and always open for communication so that the person working remotely shall not be hesitant to ask for clarification and guidance.
● Fair compensation: Money is the ultimate motivation. It’s essential to be fair in payment because it is the right thing to do. It is also a good business because it builds loyalty that will help you in the long run.
Considering the access to global talent and the significant returns Outsourcing has yielded over the years, the future of Outsourcing is bright. Perhaps, it’s not possible without automation. As digital is going mainstream, Outsourcing is becoming incredibly common.
“Over one-third of small businesses use Outsourcing to help them become more efficient” Source: Clutch