Last Updated on September 13, 2023
Only a few businesses can function totally independently. Rather, companies should form strategic business partnerships with contractors and suppliers. The core reason for these strategic partnerships is cost savings; however, such strategic outsourcing allows a business to function effectively and efficiently.
The functional areas where companies outsource.
Although a business can benefit, knowing when and how to outsource can be difficult for some. Some might not understand what outsourcing entails.
Briefly, there are two types of outsourcing. First, all daily operations are outsourced. In the second, a strategic partnership is formed. Apple is an example of strategic outsourcing.
The company Apple designs its own product, but they outsource the supply and assembly operations chain to Taiwan-based Foxconn (also known as Hon Hai Precision Industry Co., LTD). Foxconn has manufacturing sites around the world. However, 60% of all iPhones are manufactured at their Suzhou manufacturing site. This is outsourcing on a large scale. Smaller businesses would be outsourcing their printing needs to a printing company.
Offshoring forms part of outsourcing. The difference is that work or tasks are contracted to people living overseas. Virtual assistants belong to this type of outsourcing. Virtual assistants are people located abroad who work remotely from their home office. A virtual assistant is a consultant and is not an employee of a company.
Time to think about outsourcing
All projects, including business process tasks not completed by onsite staff but given to third parties, are a form of outsourcing. The business manager should include strategic outsourcing in the business plans. This article examines factors around the best time to initiate the outsourcing process.
What to outsource
The key is to identify repetitive tasks and consider which tasks are critical rather than not. A business might produce a special kitchen cleaner but lack a good distribution network. The competition has its own in-house delivery service. A strategic benefit is to outsource the part of the business that is letting business down. This will prove more efficient. The products will also be delivered on time, as with your competitor. However, not only will this benefit the products. Commodity tasks are ideally suited for outsourcing. This can be, for example, outsourcing services such as a call center so that the company can leverage the economics of scale. The benefit would be that customer service could be enhanced.
When is the best time to outsource?
Firstly, calculate cost vs time. The goal of outsourcing is to reduce costs while increasing productivity. You must have a solid standard operating procedure (SOP) in place. Within the boundaries of an SOP, consider that they can be outsourced to increase productivity and flexibility. Then think about which are long-term projects and which are short-time projects. Virtual assistants can be used for short-term projects to add urgently needed skills for completing a project. By contrast, there might be a lesser need to hire a virtual assistant for long-term projects. The needs of the onsite team working on long-term projects must also be considered. During the course of the long-term project, mini-projects may also need to be completed. Therefore additional resources are required. This is where a virtual assistant can be useful.
For one-time projects, such as designing a new website or producing a set of graphic design work, outsourcing can be helpful. The business might not have the skills, and hiring a full-time employee may not be an option. The company can still remain agile while onboarding the skills needed.
Take steps to outsource
The benefits of outsourcing are well known. You will know when you are ready to outsource. At this stage, you should use outsourcing as a strategic tool. The best tip is to outsource one task at a time. This can be a service task or an area of your business that needs help urgently. You need to make it work before you outsource the following business tasks and business processes to a service provider that offers outsourcing services.
You must also consider the language or skills that you require for your business. Then approach your outsourcing service, which will source great talent based on those needs. If native English speakers are essential, you will not source candidates from Brazil. For programs, Kenya would not be a good option. Candidates from the Balkans would be a better choice. Correctly applied, outsourcing enables the business to streamline its operations. Also, with outsourcing, the industry can make more strategic use of resources and time, growing the business more rapidly. Therefore think of outsourcing strategic to an outsourcing partner, and gain the benefits of successful outsourcing.