Outsourcing and how it works

Most times, when an organisation needs employees, it results in some form of a dilemma on how this can be accomplished. Options like outsourcing arise. This could lead to the question “what is outsourcing?”

In this post, we will be breaking down the meaning of outsourcing, types of outsourcing services and why you might need them, and, the benefits of outsourcing.

What is outsourcing?

Outsourcing is a process where a company passes over the responsibility of planning an activity or project that is or could be done internally to another company.

Outsourcing is a practice many companies deploy to get top candidates without getting involved in the process of sourcing and selecting.

Many companies all over the world are adopting employee outsourcing in order to achieve greater organisational effectiveness, flexibility, improved efficiency, reduced overheads, and focused/strategic HR management function.

The outsourcing company finds, selects, and trains candidates based on the client’s specifications to meet their workforce needs. Individuals and organisations opt for outsourcing to ease the burden and transfer the risk associated with carrying out certain functions and focus on their core competencies.

Outsourcing services and why you need them

As a business owner, you are likely to achieve your strategic goals when you focus on your area of competency.

Outsourcing eliminates inefficiency and associated expenses that arise from handling non-core functions. It is an effective way to improve organizational productivity and gain a competitive advantage in the marketplace.

The different types of outsourcing services include:

  • People outsourcing
  • project outsourcing
  • Process outsourcing

People Outsourcing

In this case, a company contracts certain business functions over an extended period of time to non-permanent staff to give support to the business growth aspirations, and allow them to focus on their core competencies.

Project Outsourcing

Considering how costly and unrealistic it is for businesses to stockpile skillsets that are only used occasionally, companies look to project outsourcing. This helps them maximize time and profit, and minimize costs.

Project outsourcing is an effective way to execute one-off tasks.

Process Outsourcing

This type of outsourcing service was formerly adopted mostly by manufacturing companies. But these days, it has turned into a concept embraced across several industries.

As the business world becomes more competitive, it has become imperative that organisations outsource some of their processes if they must increase focus and efficiency.
Some process outsourcing solutions include:

  • HR systems management
  • Payroll
  • Performance management
  • Customer care services
  • Call center
  • Marketing and marketing research support
  • Data entry and correction
  • Information center

Benefits of outsourcing

  1. Faster services: outsourcing helps you get your ideas converted into products better and faster. It cuts down on the time wasted in onboarding new employees.
  2. Access to skilled resources: by hiring an outsourcing firm, you gain access to a pool of highly skilled resources. As a result, you no longer need to invest in recruiting and training expensive resources for your business.
  3. Cost saving on infrastructure and technology: outsourcing your projects helps you eliminate investment in infrastructure since the outsourcing partner takes the responsibility of the business processes.
  4. Focus on core areas: when you outsource, you are able to focus on building your brand, investing in core areas of your business.
  5. Increased efficiency: A lot of outsourcing companies like this possess expertise from years of being in the business. Therefore, they do the job better with their vast knowledge and understanding of the territory.

Principles guiding successful outsourcing

According to Azim Premji, “the important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity, and reduce work cycles.”

Successful outsourcing is the dream of every organisation, and modern-day organisations are beginning to appreciate and leverage outsourcing to accomplish more.

Achieving success with outsourcing, however, greatly depends on a cordial client/provider relationship. For this to be achieved it’s important to adhere to the following principles:

Trust: The outsourcing company and client must be transparent with each other at all times; all processes should be open and accessible. This will naturally build confidence and trust. Successful outsourcing can only be achieved when there is a joint effort; teamwork.

There should be a balance of power as both parties have to work collaboratively to achieve desired results.

Communication: Create a room for everyone to air their opinions/ideas without bias or fear of judgment. Inform each other of developments, good or bad.

There should be open and honest communication at all levels. Good communication ensures that everyone is on the same page, goals are achieved and there are no hidden surprises.

The client should endeavor to be available for the outsourcing provider throughout the course of the project and vice versa.

Goals and Achievements: The outsourcing provider and client need to establish realistic goals together in order to determine the achievements they are working towards. That way, everyone is on the same page and plans and strategies are aligned.

The goals and objectives of the projects must be quantifiable and established. Be upfront and clear about your expectations.

Review and Analytics: It is advised to have access to analytics and frequent formal review meetings. At these meetings, both parties get to bring each other up to speed on achievements/obstacles, reviews and deliverables.

Waiting until the end of the job before checking for progress is the best way to set your organisation up for failure. The provider should check with the client to see if the procedures/processes are in line with what he desires.

The client should also make sure to receive updates at each stage, not only to be conversant with the job but to also know everything possible about it. This will help to mitigate and manage risks.

At the end of the day, the success of an outsourcing project though determined by the client, impacts on both the client and the outsourcing provider. Successful outsourcing is beneficial to both parties.

In conclusion, outsourcing has proven to be a major ‘life-saver’ for companies who intend to hire employees just to execute particular projects or those who just don’t want to go through the rigorous employment processes for full-time staff.

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