At the end of the day, the goal of a business is to be as efficient as possible, which leads to an increased bottom line and more income for the owner. By outsourcing, businesses can reduce costs while accessing specialized skills at the same time.
I’m a great example of this. I’ve built a sizeable portfolio of websites, including Bloggingtips.com, Ridester.com, Myjobsearch.com, and Gigworker.com – just to name a few – using a team of outsourced contractors.
I’m actually the only W-2 employee. I have a pretty big team of designers, developers, writers, editors, and strategists, but they all focus on their own specialty. They also work on a project-by-project basis, which allows me to scale up and own as needed.
I’ve tapped my own network of outsource providers for years, allowing my projects to achieve immense scale with very limited overhead.
Why Businesses Outsource: Key Advantages to Consider
1. Cost Savings
Outsourcing can significantly reduce operational and labor costs.
By transferring tasks to external providers, companies can save on salaries, infrastructure, technology, and training. This is especially true for businesses that outsource to countries with lower labor costs.
I outsource to countries that have a low cost of living, but where hard work is ingrained in the culture. This allows me to get high-quality contractors that work hard, but at a fraction of the cost of hiring stateside.
And because my team knows that I am loyal and give them long-term work (a key to building a successful relationship with your team), they’re oftentimes willing to offer me lower rates than they would for their other short-term clients like those from Upwork.
2. Focus on Core Activities
Outsourcing non-core activities allows a company to focus its resources on areas that offer the greatest competitive advantage.
By delegating routine tasks or specialized services to external providers, businesses can concentrate on strengthening their core functions and enhancing product or service quality.
It took me years to learn this lesson the hard way. I spent a very long time working in my business and not on it. It wasn’t until I made a heavy push into outsourcing that I began unlocking productivity that I didn’t realize was possible.
3. Access to Specialized Skills and Expertise
Outsourcing companies often have specific expertise and capabilities that the hiring company may lack. This allows businesses to access high-quality services and the latest technologies without having to invest in developing these skills in-house.
One of the best examples of this is outsourcing SEO.
Yes, you can hire an SEO manager internally, but they are likely not going to have the level of knowledge and skills that a contractor (like Trendline SEO, my agency) that lives and breathes SEO every day is going to have.
When in doubt, ask for repeatable case studies. If an internal person can’t show you graphs like the one below, they’re not doing SEO right. This might be time to figure out how to outsource this task.
4. Flexibility and Scalability
Outsourcing provides businesses with the flexibility to scale operations up or down based on demand, without the need to hire or lay off employees.
I’ve seen so many businesses fail because a business owner or manager is loyal to their employees. This is particularly beneficial for industries with fluctuating workloads or companies exploring new markets.
I believe in loyalty, but keeping a huge overhead isn’t always the best plan strategically. Outsourcing can easily solve this problem.
I encourage you to try it out. Keep a few core employees on staff in one area, and then give them a budget to source and build an outsourced team of contractors.
I think you’ll be surprised to learn how much that team will actually get done with very little overhead.
5. Global Reach
Outsourcing can not only unlock scalability, but it can also greatly expand the talent pool.
Every time I hear a business owner complain about a lack of talent, I encourage them to outsource that function. Doing so unlocks what is seemingly an endless stream of qualified candidates at, as mentioned above, rates that are usually far less than they were advertising or hiring for.
It allows companies to establish a presence in different regions without the need for significant investment in local infrastructure. Need to break into a new market? Simply hire somebody in that region and then have them help you do it.
6. Risk Management
Outsourcing can also help spread and manage risk, especially in areas such as compliance, security, and financial management.
By sharing responsibilities with external experts, companies can reduce the burden and complexity of managing these risks internally. This is especially true in the complicated fields of HR.
If you haven’t already, I encourage you to read my Examples of Outsourcing in Practice lesson that discusses this in greater detail.
8. Faster Time-to-Market
With access to additional resources and expertise, companies can accelerate the development and launch of new products or services, helping them to stay competitive in fast-moving markets.
The more you outsource, the greater your trusted team of contractors becomes. It’s interesting how efficient you’ll become at outsourcing the more that you do it.
Every time I start a project or a new website, it only takes me a few days to get a plan in motion. I’ve worked with my team for long enough that they know pretty much exactly what I’m looking for, so once I share my idea, they take off and run with it.
Final Thoughts
While outsourcing offers numerous benefits, it’s important for businesses to carefully consider the potential downsides, such as reduced control over certain functions and the risk of dependency on suppliers.
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