How Strategic Outsourcing Can Solve Key Business Challenges

As a business, it’s ok to admit when you may need a little helping hand here and there. In fact, it may be highly beneficial to do so.

 

Outsourcing means businesses can delegate menial tasks to third-party companies and concentrate their efforts on more pressing matters, such as customer satisfaction and generating a profit.

 

But what is strategic outsourcing, and how can it help you overcome common business challenges? 

 

 

What is strategic outsourcing?

Strategic outsourcing is when a company delegates internal tasks to a third party. This can include anything from a single business process, to a set of procedures, to a whole project, in some instances. 

 

So, why do businesses like the idea of outsourcing their work? The idea is to save time and money and refocus that attention on resources that will benefit from more observation. It can optimize production processes while reducing costs associated with the company’s daily tasks.

 

Many roles, such as human resources or IT, are frequently outsourced to third parties. Essentially, the outsourcing provider can take care of processes the business does not have the time or expertise to oversee.

 

The ultimate goal of outsourcing is to utilize external resources so that the technologies and experts can improve the efficiency of the company and its competitive advantage.

 

Another increasingly popular form of outsourcing is the use of virtual assistants, who can assist with tasks such as scheduling, data entry, and customer support. This allows businesses to focus on their core competencies while still benefiting from the added support and cost savings that outsourcing provides.

 

 

Types of strategic outsourcing

Outsourcing IT typically involves subcontracting an external specialist or IT company to care for all or part of a business’s tech needs. They are used in industries such as law, hospitality, and more. Their support ranges from software development to maintenance and support.

 

As we know, IT is essential for most businesses today. Companies in various industries have IT requirements or, at the very least, need assistance on a technology level. For many companies, it can be more cost-effective to contract a third-party IT management team than to create an in-house one. Companies often use IT outsourcing services to store and manage their data, although some businesses only outsource a fraction of IT functions.

 

 

It may come as no surprise that manufacturer outsourcing services can be rather industry-specific. For example, a catering machine manufacturer may have an outsourcing agreement with an industrial-scale bakery or wholesale food business. This could include building and maintaining all of the equipment. Outsourcing arrangements like this can significantly reduce costs and improve assembly time. 

 

 

Without the help of third-party outsourcing companies, many businesses may struggle as they lack the economies of scale that allow them to keep up with competitors. Fewer companies have the money and resources to invest entirely in equipment, personnel, and technology to stay up-to-date with the current market.

 

 

Professional outsourcing refers to outsourcing from a company with a critical set of skills or knowledge, including legal, accounting, IT, and copywriting. It’s a popular form of outsourcing because there is potential for high-cost savings. 

 

Outsourcing professional services means the company only spends on the services provided by the external business, while enjoying access to high-quality resources that can help to significantly reduce overhead costs.

 

 

It’s common for a business to outsource specific operation-related aspects to other companies that specialize in that area. For instance, a jewelry designer can outsource the delivery of their goods to a courier company like UPS. 

 

A contract like this would involve the jewelry maker supplying details on delivery timelines, customer contacts, and costs and using a tool such as Inventory Planner for lead times. This allows the business to focus on more customer-facing tasks, such as improving customer service and reducing wait times.

 

 

A popular strategy for many businesses is outsourcing projects rather than a whole department. This can be useful if the company receives work from clients but doesn’t have the personnel to complete the tasks. 

 

In some cases, the company may not have enough employees with the necessary skills to work on a particular project or task. It could also cost more to complete the project internally than to outsource to another, more experienced team or company. 

 

 

6 benefits of strategic outsourcing

Every business is going to have its challenges. Here are some ways strategic outsourcing could help you to overcome them.

 

Managing security risks is one of the most crucial IT challenges for modern businesses. In fact, many organizations have fallen victim to a security breach due to their lack of expertise in what is known as data science and its associated technologies.

 

Unfortunately, cybersecurity attacks aren’t going away anytime soon, so businesses need to think ahead and develop a strategy that may include security outsourcing.

 

By relinquishing in-house security systems and appointing outsourced IT services as the primary security, a company may gain insight into its network security vulnerabilities that they otherwise may never have been able to spot.

 

 

 

Why try to solve challenges yourself without the required expertise? This could cause you to make costly mistakes and waste time. Attempts at doing so could be in vain, and you may actually set yourself back rather than propel forward. 

 

When it comes to in-house, you might hire the wrong person for the job, or there may not be enough consistent work for a full-time position. However, when you outsource the work to specialists, you can minimize risks across the entire organization by putting work into the hands of experts.

 

 

One of the main benefits of strategic outsourcing is improved performance. Strategic outsourcing offers companies access to technology, opinions, and other resources they otherwise may not have accessed. 

 

A third-party provider can concentrate on its area of work, using orchestration workflow efficiently without the need for upskilling for the business.

 

Specialists will utilize their know-how to bring alternative approaches to coordinate specific processes within the company. Therefore, in some cases, they can deal with more significant volumes of work. Sometimes, the outsourcing costs are significantly lower than they would have been for performing the same activities in-house. 

 

 

Outsourcing allows for flexibility in allocating resources that otherwise would have had to be used internally. 

 

This means redistributing resources such as time, effort, and fixed assets. These are taken on by the external company and can be a significant help for many businesses that simply don’t have the time to oversee them. 

 

Freeing up resources to take on more pressing issues within a business allows the company to achieve better results in its main line of work. Outsourcing also allows a business to redistribute investment capital into activities that may be more important for the company. For example, the company can stop investing in infrastructure and only pay for outsourced services.

 

 

Let’s face it: every business aims to be the best in its retrospective market and claim a competitive advantage over other companies. Outsourcing across areas you may not have expertise in can help you improve workflow and flexibility, increase growth, minimize costs, and stay ahead of the competition.

 

 

Customer engagement is vital for a business. Keeping customers happy leads to sustainable business growth in the long run. By outsourcing services such as IT support, you can refocus on engaging with customers to create lasting relationships that will turn them into repeat buyers.

 

You may use small business phone services, social media, messaging apps, voice calls, or other means of communication. Whatever you choose, it’s time better spent interacting with the customer. Plus, your business can generate and retain customer loyalty over time by providing an efficient, seamless service at every interaction.

 

Outsourcing IT services also allows companies to free up their time and resources to address customer queries before they have a chance to escalate. So, customers are happy with the help they are receiving and employees will have more time on their hands to offer the correct guidance to customers. This improves overall customer experience and satisfaction.

 

 

What are some of the challenges?

If some aspects of a business are outsourced, such as human resources, there is an increased risk as confidential company information needs to be revealed to a third party. 

 

However, you can mitigate such risks by carefully vetting any service providers and vendors, ensuring they follow cybersecurity outsourcing protocols while having your own safeguards in place. 

 

 

Understandably, many companies are reluctant to give up control over specific tasks. It may feel as though you don’t have control over certain aspects of the business. However, a good service provider should keep your team updated and provide you with necessary information. Ensure you utilize communications software and tools. You can even connect Gmail to Slack to stay on top of updates.

 

 

Another challenge that businesses may face when they outsource is language differences and communication issues. People might have trouble communicating if your native language is not the same as theirs. However, this can be solved by consistent and clearer communication. This is where video conferencing tools, such as Dialpad video calls, come into their own.

 

 

Nowadays, many businesses have decided to outsource certain parts of their business. Put simply, it can be highly beneficial for companies. While you may have to give up control in certain areas, you can save money, time, and resources to pile into other aspects of your operations.