Outsourcing has been a critical factor in the success of many large companies, including Google and Slack. These companies have leveraged outsourcing to access specialised expertise, cost reduce, save time, and improve efficiency. By outsourcing non-core functions, such as web development and customer support, these companies have been able to focus on their core competencies and grow their businesses. There is no reason why your company can’t do the same.
Top 5 Successful Businesses that Outsource
Businesses, both start-ups and large, successful corporations, choose to outsource for numerous reasons. According to Deloitte, the top three reasons why businesses choose to outsource are as follows:
- To cost reduce
- To focus on core business processes
- To solve capacity issues
With large quantities of marketing-related articles flooding the internet, it can be difficult to tell whether certain decisions are actually to your business’s advantage. Does outsourcing genuinely cost reduce, save time and alleviate your workload, or is it just well-marketed?
Outsourcing is a buzzword and has certainly become a grey area. For some clarity on just how beneficial outsourcing can be for large companies, take a look at this list of successful businesses that benefit from outsourcing services:
1 . Google
Google is a major company known for outsourcing non-core functions like admin and IT work since 2011. Even with Google’s immense success, the corporation understands it cannot do it all. They have also outsourced development-related work, such as email support for AdWords and other products. Instead of just offering email support, Google had expanded to provide phone support with staff globally to optimise their services and cost reduce.
According to Bloomberg, Google’s outsourced contract workers have outnumbered their internal employees since 2018. Outsourcing employees has helped Google maintain its profitability year after year, while allowing them to cost reduce and access to global talent in-house. Furthermore, outsourced employees help Google cover its needs during US employees’ parental leaves.
2 . Basecamp
Established in 1999, Basecamp is a well-known real-time collaboration tool for team communication, project creation, progress tracking and management. Basecamp is prevalent in project management, but even with its success, the team has limited their in-house resources. This company outsources remote developers and other external support, allowing their internal staff to focus on their internal processes, cost reduce and manage their workload.
Basecamp has 3.3 million users as of 2023 and only 53 internal employees. The company realised early on that trying to do everything themselves wasn’t a feasibly or affordable strategy. Outsourcing allowed them to resolve issues with streamlined workflow and customer support, while finding ways to cost reduce.
3 . Zoom
Zoom is a widely used, globally recognised video call software used on PCs, phones, laptops and numerous other technology devices. Zoom continues to outsource its large engineering team from China, where the average tech salary is significantly lower than in the US Zoom has over 500 employees across multiple R&D centres in China, which comprises more than 30 per cent of its total workforce.
It is predicted that the global video conferencing market will reach $75 billion by 2027, with Zoom being one of the most successful businesses in this industry. Outsourcing from China has allowed Zoom to actively cost reduce and dedicate the majority of their financial resources to their core operations.
4 . Slack
Slack is a messaging app for businesses designed to keep people connected and give them the access to the information they need. The idea is to bring a business together as one unified team. Slack only had a core team of four developers responsible for building the product before its release into the public market. The company outsourced a design firm for beta testing so that they could ensure their product would be successful once it became publicly available.
Slack outsources most of its design and UX services and is used comfortably by over 10 million daily active users as of 2023. Outsourcing functions allowed Slack to cost reduce and save time to better establish and refine its goals. The company has radically changed how corporations handle their internal communications and is easily identifiable with its user-friendly interface and playful logo.
5 . Alibaba
Alibaba is a Chinese multinational technology company responsible for creating a leading business-to-business marketplace which has been hugely successful in the world of e-commerce.
Alibaba sought out companies to outsource from early in their development for numerous projects and found the skills necessary in companies in the US. Outsourcing helped Alibaba increase the appeal of its platform, cost reduce, and subsequently increase its ROI. Alibaba’s net worth as of 2023 is $316.53 billion.
The benefits of outsourcing were apparent to these companies when they were still start-ups, and they all chose to trust other companies with their non-core operations. It is, therefore, arguable that outsourcing was instrumental to the success of these companies. Outsourcing isn’t just a tool available to successful companies, it’s a tool that makes companies successful.
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Weigh Up Your Options to Cost Reduce
There are several different reasons why companies choose to outsource, and it is best to have a thorough understanding of what your reasons for considering outsourcing may be. Whether you intend to cost reduce, streamline operations, or save on supplies. Trusting another business with your operations isn’t a decision you should take lightly, however, if the if approached carefully, the advantages can significantly outweigh the disadvantages.
It's crucial to note that outsourcing also comes with some potential downsides, such as loss of control over the outsourced tasks, loss of knowledge and skills in the company, and potential issues with communication and coordination. It's important to weigh the pros and cons of outsourcing to cost reduce before making any decisions. Vetting the company of your choice in advance is advisable to avoid complications such as poor communication and low-quality work further down the line. Before committing to outsourcing, understand your motives, clarify your business goals and know when to outsource support services for your business.
Outsourcing is one of the most effective ways to cost reduce. If you want to better understand the benefits of outsourcing, and how to properly vet a company before getting too involved, our list of top reasons for outsourcing in 2023 will serve as an invaluable guide.
The Pitfalls of Insourcing
Many businesses opt to insource all of their services; however, this can put immense pressure on a company’s operations, lead to stagnation and prevent a business from being flexible and scalable. Furthermore, insourcing all company processes isn't the best way to cost reduce. This approach can become needlessly expensive and doesn’t help an organisation’s budget or ability to cost reduce. The cost of training employees, providing equipment and developing effective systems to manage all processes can be devastating financially and time-wise.
By outsourcing non-core operations, companies can cost reduce, ensure that their operations remain flexible and scalable and that the internal company workload remains manageable. Furthermore, this process can cost reduce and save resources that can be dedicated to other areas of the business.
How Outsourcing Can Help You Cost Reduce
Outsourcing involves hiring a company to do business-related services that in-house employees would otherwise do, and is a very effective way to cost reduce. For large, successful companies and small start-up companies alike, outsourcing can be beneficial in several other ways as well:
- Paying to receive services via another company can save time and resources which are better used on core business activities.
- Outsourcing can lessen the workload for company staff, improving operations and team motivation.
- Outsourcing can help companies cost reduce their labor costs, as fewer internal employees are needed, and third-party companies often charge lower rates for their services.
- Access to specialised expertise becomes possible, as outsourcing companies can provide companies with access to knowledge that their employees may not have.
- Outsourcing can help companies improve the quality of their products and services and increase efficiency.
- By making an effort to outsource non-core processes, companies can focus on their core competencies and cost reduce by delegating the rest of their tasks to specialised outsourcing companies.
- Outsourcing tasks on a project-by-project basis can help companies respond quickly to changing business needs and maintain high flexibility.
- Company operations become easily scalable without the costs of hiring and training additional employees being a concern.
Outsource Non-Core Services and Cost Reduce
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