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    What is Outsourcing? A Complete Guide to Outsource Business

    Everything About Outsourcing

    What Is Outsourcing?

    Outsourcing is the process of hiring third-party agencies, companies, or individual persons to perform tasks on our behalf. Outsourcing is used so that a company can focus on its core operations, and also save costs on labor. Certainly one of the primary challenges of outsourcing is privacy, which is often feared to get compromised. Keeping this in mind, companies design various contracts and laws which can prevent both the parties – the core company and the outsourced company maintaining its sanctity.

    Undeniably outsourcing has impacted the labor market to a great extent and has drawn criticism in many domestic economies. Until the recent past, outsourcing was rightly understood as call centers responsible for making calls to customers on behalf of the company and generating sales. Below mentioned are the reasons why businesses choose to outsource:

    #1. Task Is Done On Time:

    Firstly, today most online tasks or jobs are outsourced to virtual assistants, who perform these tasks remotely on time, ensuring speed and accuracy. Secondly, outsourcing is one of the best options for e-commerce to cut costs and become more efficient, in this competitive era, where most offline companies are also opening their online platforms.

    With e-commerce business, outsourcing can typically mean writing product details and descriptions, developing websites, handling support tickets. Furthermore brand marketing, providing the needed technical support and assistance, and so on.

    #2. Work Is Done Depending Upon The Needs:

    Furthermore sometimes even the total responsibility of developing an e-commerce business is given to a third-party company. The outsourced company can be either domestic or international depending on the needs, targeted segment, and priorities of the core company. Hence E-commerce companies outsource their business responsibilities to cut current costs and save for other projects.

    Advantages Of Outsourcing

    Most e-commerce and online businesses are outsourced nowadays, due to the advantages it provides. Let us look at the advantages of outsourcing:-

    #1. Improved focus on the core or main business activities:

    Outsourcing tasks can help core companies to focus on primary business activities. For this reason it must be kept in place to ensure the smooth functioning of the core organization. Moreover involving teams from the primary organization to complete tasks associated with the launch of an e-commerce website may jeopardize the responsibility handled by they have.

    #2. Increased efficiency:

    Outsourcing helps the completion of tasks in a more efficient manner, since a team of professional specialists, dedicate themselves only to the work assigned to them and have a targeted deadline within which they are supposed to deliver the tasks. Also, the reputation of the outsourced company as well as the chances of getting further business depends on the efficiency of the team members.

    #3. Controlled costs:

    Outsourcing can help us track costs associated with online tasks or e-commerce more effectively. Hence the sole aim of the company is to get the most out of their investment in a shorter time. Also since the task is handled by professionals, they exactly know how to handle tasks efficiently and deliver them within a shorter span of time.

    #4. Increased reach:

    Outsourcing companies and the individuals they hire are skilled in ensuring that your e-commerce brand reaches as far as possible, and gets the maximum traffic possible. So this is how outsourcing to professional help.

    #5. Greater competitive advantage:

    Outsourcing can make your business more flexible and agile to adapt itself quickly and respond faster to market changes and changes in prices and find ways to establish and adapt itself quickly at a lower cost. Furthermore this ensures a greater competitive advantage, in the face of such stiff competition.

    #6. Offshore outsourcing issues:

    Offshore outsourcing can often help companies in saving money by reducing operational costs and labor costs, significantly.

    Disadvantages Of Outsourcing

    Although outsourcing is the current smart work trend with more and more companies reinforcing their strength to the fullest.

    Let us look at a few disadvantages of outsourcing:-

    #1. Confidentiality and security: –

    Outsourcing always comes with the risk of compromising on confidentiality and security of a company’s data. Hence it needs to managed very carefully. Although agreements and contracts are signed prior to assigning the task to other companies and approved by a legal advisor, still chances remain that data can be hacked from the outsourced companies’ servers, if not stolen by them, purposefully.

    #2. Lack of Flexibility: –

    Often the contracts that are signed between the core company and the outsourced company, prove to be too rigid. Moreover the implement in any change or execute tasks that need to be done, as a part of the process.

    #3. Service Delivery: –

    Quality may be compromised and may not meet the expectations of the company or the clients. Also, service delivery may also fall short of time and might need an extension.

    #4. Management difficulties: –

    Management decisions may change from time to time, for both the core and outsourced companies, depending on the market situation and a lot of other factors. This may lead to delays in the actual delivery of tasks and hamper both the productivity and profitability of the mother company.

    #5. Instability: –

    Often not anticipated, but chances are always there that the outsourced company may wind up its business. Such scenarios are often less, but not totally impossible. Moreover companies whose tasks are outsourced to the former have to bear to inconvenience and resulting losses.

    Why Outsource A Project To A Virtual Assistant Company?

    Outsourcing tasks to virtual assistants who work remotely is a beneficial thing. Thus it is an effective thing to do. Hence this can help you cut costs on office spaces, equipment, and utilities. It can also help companies to multi-task and assign various projects from time to time and increase its efficiency and time. It may often so happen, that an organization misses important dates of payment and official document submission, due to work pressure or some business event going on in the company.

     These regular tasks when outsourced help an organization and save its reputation in the long run. Furthermore virtual assistants are professional experts who exactly know how to complete a task quickly within a short span of time efficiently.

    What Is Outsourcing In Business & Why Do Companies Choose It?

    Outsourcing is an agreement between two companies, in which one company hires another to complete certain projects on their behalf, on an agreed standard. For eg, a company may decide to outsource its bookkeeping activities to an accounting firm, and outsourcing the accounting tasks may be cheaper than hiring a full-time accountant working as a full-time employee.  

    Many other companies global source their human resource tasks such as recruitment and payroll to other companies on an agreed standard. Outsourcing is done when a firm or an organization requires specific skills or machinery to perform certain regular or project-based work that is not central to the organization.

    Even if the business needs additional workers, office space and infrastructure is limited. Hence investing in office space and machinery would incur costs, which if extended or outsourced can be easily done. On the other hand, hiring cheap labor from other countries means getting the work done at lower wages.

    Outsourcing has proved to be really beneficial, particularly for the service sector. Firstly, your customers get consistent customer service. Secondly, your internal team can focus on their own task, helping your business run more efficiently.              

    Which Is The Best Example Of Outsourcing?

    Some of the very common outsourcing activities includes: accounting activities, human resource management. Furthermore there is supply chain management, facilities management, logistics, customer service, computer-aided designing, content writing, graphic designing, legal tasks etc. For years Google has been outsourcing its work, including IT, software development, and so on.

    Google does so for two reasons:- To hire global talent from across the World which they do not have in-house. Also, it serves their needs when the regular employees are on leave.  On the other hand companies like Accenture, are outsourcing companies providing assistance in digital operations and technology. They provide such services to more than 120 countries. In recent years the demand for outsourcing services has increased considerably because of the lockdown induced by Covid-19 and quarantine measures.

    Why Do Companies Outsource?

    Companies outsource for getting qualitative work. Furthermore the work is delivered at the best price and within the stipulated time. Hence companies do outsourcing for increasing the efficiency of work. Furthermore some benefits of outsourcing listed as follows:

    #1. Focus on the core business, and the responsibility involved with the same. Thus it is always more wise and efficient to spend time doing whatever you’re specialized at and are actually paid for.

    #2. Reduction of labor costs. In addition work is done more quickly.

    #3. Control cash flow.

    #4. Get access to top talent or intellectual capital. Moreover having the expertise to complete the task diligently everytime.

    #5. Retain the full-time employees.

    #6.  Business needs arising from time to time can be easily met.

    #7. The results are fast. Hence there is a hike in the productivity.

    #8. Risk minimization.

    #9. Take advantage of new technology. In addition work is done more quickly. Furthermore you can work faster.

    Although outsourcing has several benefits, there are several disadvantages of outsourcing. Let us have a look at them.

    #1. Outsourcing or delegating a task to a third-party firm other than one’s own organization leads to risk in confidentiality.

    #2. In case the outsourcing firm winds up its business then the firms dependent on them would be in trouble.

    #3. Depending on others would mean you have no idea of the function so delegated to the other firm and it can rule you accordingly.

    #4. Delegating tasks would also mean a lack of internal talent development. Furthermore this hampers the outsourced task.

    #5. Outsourcing may sometimes be more cost-effective. Hence hiring a full-time candidate is useful.

    Siddhartha Basu

    Siddhartha Basu is a Technical Writer at Task Virtual. He loves online games, e-book reading, and Yoga.