Outsourcing (derived from “Outsourcing”) is not an invention of the modern era: in the 18th century, Adam Smith introduced the principles of division of labor and specialization to increase the company’s productivity. In the 60s, the term “outsourcing” was first given. According to Smith, workers should only be sent to the areas in which they specialize.
Outsourcing is the practice of outsourcing individual tasks, subsections, or business processes to a third party with results from outside your company. These tasks are often secondary business functions: tasks that need to be completed in order for the company to focus on its core business.
In the course of globalization, thanks to global logistics concepts and the constant development of the Internet, it has become easier than ever for companies to outsource more or less a significant portion of their processes to other companies. Those who outsource the right way can speed up their work processes and improve their products or services to face growing global competition.
The IT sector is a leader in outsourcing. According to the Outsourcing Trends study, 56% of all surveyed enterprises outsource their IT tasks and processes to a large extent. 44% of HR processes are outsourced, as well as 37% of telecommunications services and 26% of all tasks related to facility management. Further tasks that are regularly outsourced relate to e-commerce (16%), call centers (15%), accounting (13%), or logistics (11%).
Advantages of outsourcing
- The company providing services has key competencies and experience in implementing your tasks, hiring an agency you get expertise.
- Reducing costs: Providing outsourced services is generally more cost-effective than hiring specialized staff in your own company.
- Saving time: Usually, businesses take a long time to get to know new business areas. Outsourcing saves time and allows you to invest it in other areas of business development.
- Quality improvement: Using outsourcing strategies often provides quality benefits. These advantages are due to the high degree of specialization of external service providers.
- Lack of know-how: New processes and operations in companies are often needed, but employees often lack the know-how and implementation skills. An alternative to hiring skilled workers for this is outsourcing.
- Flexibility. On the one hand, tasks that need to be solved in the short term can be quickly outsourced, which creates additional resources during peak periods for the business. In this way, it can be ensured that none of the permanent staff will be overwhelmed during seasonal surplus workloads or periods of strong growth. In the event of unforeseen tasks, individual projects or processes can be outsourced to service providers, which will free up time to meet unexpected needs.
Do you think outsourcing is a good strategy to grow your business? There is no single right approach to outsourcing a project. Just as companies differ from one another, outsourcing strategies also differ. Here are some basic steps:
Determine which areas require additional external resources to achieve the target.
Analyze the actual state of a task, sub-region, or business process. Based on the analysis, you can determine the best further course of action and evaluate the potential of the outsourcing strategy.
Arrange a kick-off meeting with all your company’s stakeholders to get the most out of your outsourcing project. The meeting can lay the foundation for future collaboration. It should highlight and discuss the benefits of the project, the scope and timing of the project, and the next steps.
To interact with potential service providers, you will need product requirements and a scope of work. In the product requirements documents, you write down all the basic requirements as well as the rough concept of the project.
However, in the scope description, you indicate the relevant solutions and detailed requirements. On this basis, service providers can propose new solutions or develop existing ones. In addition, you will avoid possible misunderstandings.
You can always contact the company for additional information in order to determine the relevance of this solution for you and outline an action plan.
