Term

What is Outsource?

3 MIN READ

Outsource

Outsourcing refers to a company’s practice of hiring an additional workforce from outside to provide a certain service on a contract basis in order to reduce its operating costs. Usually, companies hire personnel from outside (i.e outsource) to perform tasks done by their in-house workers. 

In comparison with an in-house staff, outsourced employees can perform a wide range of tasks, from customer support to manufacturing, and are considered more cost-effective. 

Examples of outsourcing

Outsourced employment is required when companies from different industries require an additional workforce for their sales or customer support department. In these cases, companies sign a contract with outsourcing companies for a certain amount of months, the result of which will determine if companies will renew a contract or decide to cooperate with another company.

Advantages of outsourcing

There are multiple benefits companies can get from outsourcing. They include:

  • The focus on core competencies. Companies, which outsource their employees, usually acquire them for non-core activities, so that their in-house team can focus on the company’s main goals. Outsourced employees performing smaller tasks can increase the productivity and competitiveness of the business and also save on operational costs.
  • Skills and resources. Being a part of different businesses, outsourced employees can bring new practices and expertise to your business.
  • Flexibility. If you have a dynamic business environment with changing conditions, outsourced workers are easy to adapt. 
  • Cost-effectiveness. Outsourcing staff is budget-friendlier in comparison with acquiring an in-house employee and the time of their onboarding doesn’t take long. Therefore, you acquire an additional workforce and save costs on your operations.

Disadvantages of outsourcing

  • Differences in time zones. Usually, outsourced business development centers are located in countries, where it is possible to ensure budget-effectiveness for businesses. Because of being located in different countries and sometimes even different continents, outsourced workers may work mostly under different schedules.
  • Lack of control. Outsourced employees don’t work in the same place as the in-house team and therefore the only way to reach out to them is via email or telecommunication applications. The lack of communication can bring a possible deceleration of turnaround time
  • Cultural barriers. When companies hire outsourced personnel, cultural peculiarities play an important role in the success of this business strategy. For example, there are festivals and special dates for representatives of different cultures, which are different from the in-house office.

 

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