Top Reasons for Outsourcing in 2023

65% of companies that previously outsourced are planning to increase outsourcing in the near future. Are you considering outsourcing non-core activities? There are many reasons for outsourcing business processes, including lack of time, difficulty finding employees qualified for specific tasks, and a need for more space to host certain services. 

If those challenges sound familiar and you’re wondering if it’s time to outsource your non-core activities, let us guide you to a calculated decision.

What Is Outsourcing?

Outsourcing refers to hiring outside your organisation or getting another business to deal with specific processes on your company’s behalf. This is a widely used practice across many industries, which can be immensely beneficial if navigated wisely. 

For example, an organisation in the maritime industry that transports goods for its customers might decide to outsource certain non-core tasks, such as IT support or its financial processes, to a third-party provider. 

The outsourcing industry emerged in the late 80s and early 90s as a necessity to help businesses navigate a rapidly expanding global marketplace and increased labour costs.  

According to North Carolina State University, contractual agreements with other companies were essentially strategic partnerships implemented as cost-saving measures. Today, the reasons for outsourcing are the same. Outsourcing proved an effective, relatively affordable process and remains relevant in the current business world. 

Strategic partnerships benefit businesses looking to do the following:

  • Reduce their operational costs.
  • Combat a lack of internal resources.
  • Gain access to specialised workers.
  • Improve focus on their core operations.

These are just a few advantages outsourcing proved to have in the 80s and 90s, which led to its resounding success as a concept going forward.

Top Six Reasons for Outsourcing

One key benefit of strategic outsourcing partnerships is that they can resolve various challenges while saving your business money and resources, which can be allocated to other company areas. IT, applications, and customer support services are all common business processes you might consider outsourcing. 

The top reasons for outsourcing include the following:

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First Reason for Outsourcing: Access to Experts

If you frequently find that local hires are unsuitable for the roles you need them to fulfil, why not outsource to experts? By leaving non-core processes in the hands of a reliable company of well-qualified individuals, you can ensure that tasks are handled effectively and professionally. 

Outsourcing allows you to avoid the time-consuming process of sifting through unreliable CVs, interviewing candidates, and dealing with new hires who disappoint with their lack of skills and low work ethic.

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Second Reason for Outsourcing: Cut Costs

Did you know that 59% of businesses cite cost as the top reason for outsourcing

Cost savings can refer to anything from saving valuable resources in order to dedicate them to other areas of the business to saving physical space in a company’s offices. For example, companies might outsource customer service support, so they don’t need to hire extra office space or purchase technology such as headsets and computers. 

By outsourcing services, you can avoid financial strain and allocate resources to other important parts of your business.

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Third Reason for Outsourcing: Manage Workloads

You can’t afford to overwhelm your team if you want your business to operate smoothly; they’re your greatest asset. But without outsourcing any processes, your workforce will quickly become overwhelmed - multitasking and losing focus as they perform tasks outside their job descriptions. This can cause issues across the business and even affect the reliability of your company’s services long-term. 

While there is the risk of outsourcing being perceived as a threat, it can also relieve your workforce. Explain the benefits to them. Position outsourcing as a way to take the workload off their overburdened shoulders. 

In addition, investigate the current state of your internal processes; this can be done using surveys to gather staff feedback to determine the best course of action moving forward. Before you outsource, you ideally want your team to be on board with the decision, and you want to ensure that outsourcing will directly help them.

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Fourth Reason for Outsourcing: Upgrade Your Operations

With the constant evolution of technology, the enemy of progress is legacy systems. Failure is imminent if company operations become inflexible and reliant on outdated software, hardware and processes. 

In today’s age, a company’s adaptability determines its long-term success. However, overhauling internal operations to keep up to date with technological changes can be intimidating and disruptive if done incorrectly. 

Upgrading your operations by employing a company that is up to date with the latest technological solutions is an excellent reason for outsourcing. When you outsource to a dedicated tech-savvy company, you ensure that processes happen seamlessly and that the latest technological advancements are implemented without upheaval within your company.


Fifth Reason for Outsourcing: Flexibility

One of the reasons for outsourcing is that it’s more advantageous for your company’s cash flow than paying a full-time salary to someone whose services you might not need regularly. 

While a salary must be paid consistently, outsourcing is often available on a pay-as-you-go basis. Rather than paying a fixed monthly cost, you only pay for what you need when needed. It offers more flexibility.

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Sixth Reason for Outsourcing: Avoid Stagnation

If you ignore the current challenges your staff faces, it can quickly lead to stagnation and a lack of innovation. However, outsourcing can assist. 

By outsourcing, you alleviate pressure from your workforce, make room for idea generation, and increase creativity, productivity, and innovation. Outsourcing takes the tedious, non-essential tasks from passionate individuals and allows them to thrive in their roles. 

How to Avoid the Drawbacks of Outsourcing

Many businesses have legitimate concerns about outsourcing. Internal and external risks are associated with outsourcing to a company outside your own. 

However, you can avoid many outsourcing catastrophes if you approach the transition with care from the beginning. 

Here are some of the best ways to navigate common outsourcing challenges:

One: Communicate with Employees

When you outsource, there is the potential for an outcry from internal staff who may feel that their jobs are being threatened by outsourcing. Employees may feel that they are being replaced, which can lead to demotivation and dissatisfaction and, therefore, a decline in the quality of work produced by internal employees. 

But don’t let this stop you from outsourcing.

  • Simply share your reasons for outsourcing with your employees in advance. You can quell discontentment and distrust before they become a hindrance. 

It’s important to take the time to reassure your employees that outsourcing will benefit them, too.


Two: Choose Your Service Provider Wisely

Communication is key when outsourcing. However, businesses often encounter communication issues with their outsourcing partners. This causes delays you can’t afford.

When the service provider does not respond quickly enough or know how to provide the information you need, your business operations will suffer. Thus, you should consider time zone differences, language barriers, and communication terms before signing an outsourcing agreement. 

You should also confirm that your outsourcing company understands your company, goals, and reasons for outsourcing. This context will allow them to serve you better. 

  • Pay careful attention to how smooth your interactions are from the get-go, and read this article on when to outsource for your business for a comprehensive list of things to look for when vetting a company. 

Three: Avoid Poor-Quality Services

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It’s your worst nightmare: you commit to an outsourcing company, only to receive poor-quality services. This has a colossal negative impact on your company's operations, and you may struggle to repair the damage before it becomes unrepairable. 

This is nobody’s ideal experience, but the risk can be managed if you do the following:

  • Do not start off by outsourcing your most vital processes or outsourcing in bulk. Outsource the non-core services that aren’t related directly to your offering but are necessary for the business, such as technical support and helpdesks.
  • Make sure the company you choose is niched in your industry and thus understands the intricate internal operations of your industry. For example, solverASSIST specialises in helping maritime, technology, and technology businesses. 

Four: Avoid Data Leaks

When HR, payroll and recruitment services are outsourced, there is always the risk of confidential company information being leaked to a third party. Thankfully, you can avoid this with effective risk management: 

  • You need to be proactive, rather than reactive, when managing your third-party risks. It’s crucial to regularly monitor, evaluate, and report on your third parties and understand and manage any risks related to those third parties.

Find out about your third-party provider’s cyber security practices, risk management processes, and how they manage and safeguard your data.

With proper vetting, you can identify reliable third parties to host non-core your company’s activities and improve business operations, ultimately increasing your ROI and boosting your company's success.

Outsource Solutions for your Business in 2023

At solverASSIST, we give you an opportunity to partner with experts in the shipping and logistics domain and leverage IT service solutions tailored to meet your business needs. 

We provide outsourcing services to support your applications, technologies, customer service, and more. 

Let us help you scale, succeed and thrive amid the rapidly evolving digital age. We’d love to discuss exactly what you need. Reach out to us.