Last Updated on September 13, 2023
With globalization, the internet, and the increased use of English, the world has not only become smaller − the risks and lack of clarity on the global economy demand that businesses remain flexible. Such means that you must upscale and downscale as the situation changes.
For the traditional business, this is not possible. However, with outsourcing, the situation is different. Here are the top 10 reasons for outsourcing:
1.) Lower salaries
In the words of Joe Jackson, “It’s all about the money.” Businesses wouldn’t be outsourcing jobs if they weren’t saving money.
One study concluded that the USA’s per capita income by the end of this year would reach $56,200.00. By comparison, the per capita income in South Africa by the end of this year would be $7080.00, which is $ 49 120 less than in the USA.
These lower wages are the driving force behind outsourcing and why large companies, such as Unilever, ISS, Capgemini, and others, have taken to outsourcing.
2.) Concentrating on core work
Another reason for companies selecting outsourcing as a staffing solution is that this method frees up time. Regarding transport economics, you gain valuable time to do other tasks when you offload work.
These are either your own tasks or those of your staff, the work they were hired to complete.
This increases productivity and workflow and thus speeds up projects so they can be released to the marketplace soonest.
3) Lower regulatory charges
Besides saving on salaries when companies outsource, they will also pay much lower regulatory costs, which helps drive operational costs much lower.
Medicare, Security, and unemployment insurance programs don’t apply to most developing countries.
4.) Tax breaks
Regarding tax efficiency, countries like Ukraine offer lower corporate tax than countries like Taiwan or Singapore. It’s only natural that smart companies would benefit from these savings.
In countries such as Hungary, Ireland, and Estonia, corporate tax rates were below 15%, with Ireland’s rate standing at 12.5%. This meant large internationals opting to base their head offices in such countries, for instance, Apple.
However, recently, this has changed under the guidance of the European Union. The result was a multilateral broken corporate tax rate of 15%. This would save companies millions.
However, the Biden administration has hinted repeatedly that it will increase corporate tax in the US to 28%.
5.) Better service
Outsourcing can help you to improve your service. Your focus should be on the consumer and keeping your consumer happy; customer service is critical in this process.
An in-house customer service team might be helpful, but it is also expensive to operate. However, people with similar skills can be onboarded to complete the same tasks, only for much less.
The most popular roles companies choose to outsource are HR, call center work, administration, and IT work. In most cases, outsourcing becomes a game-changer for these companies.
6.) Risk management
Risk management is another key reason for companies to outsource. This is especially vital for startups that have higher risks or even companies launching a new product to the market – there is a risk that this product might fail.
Outsourcing the work reduces the risk, as less money is spent on the product in its entirety. Also, if the company follows an agile approach, it can quickly make changes.
These would include onboarding the skills lacking to complete a project, thus improving the potential demand rate of the product.
7.) Freeing up in-house resources
Why waste people in areas that don’t focus on core business functions? Capital and people are becoming higher commodities in a challenging financial environment: companies need as many good people as possible to focus on business matters.
By outsourcing reducing the amount of taxes paid, companies free up time and capital to move their businesses forward.
8.) Peace of mind
The concern many have with outsourcing relates mostly to not knowing how to approach it correctly. Some, with disastrous effects, attempt to hire remote workers themselves.
Unfortunately, this does not usually work. Firstly, business owners and many managers lack the skills to hire people. Secondly, they lack the skills of managing people. The consequence is an unproductive project and one not only disruptive but costly.
It is best to opt for a reputable outsourcing company to assist with sourcing great people. This will resolve the hard work for you.
The result will be employing the right people to do the work. You will then start seeing savings and increased productivity.
9.) Productivity
Trying to manage too many tasks and spreading yourself thin might initially be manageable; still, the workload will be overwhelming over time.
The standard of your customer service can also be negatively impacted. The knock-on effect is that you might even start to lose clients and revenue.
However, if you approach outsourcing correctly, you should not only be able to offer excellent customer service, but you can add much-needed expert skills that you might not have in your business.
More than the money-saving benefits, outsourcing or onboarding a virtual assistant means that your core staff can focus on their primary tasks.
Such include strategic aspects of the business instead of mundane and time-consuming tasks. The result is increased productivity and, in time, an increase in revenue.
10.) Flexibility
The pandemic has reminded us that businesses must remain flexible; a company might need to upsize and downsize with ease and at speed. With labor laws, such flexibility is not always possible.
Staff members can file a lawsuit, costing you money and interrupting the workflow. By contrast, outsourcing is primarily free of this risk.
A company can resize the staff component agilely, adapting to changes taking place in the global economy.