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What Are the Top 5 Reasons Companies Use Outsourcing?

Outsourcing is the process through which businesses entrust their day-to-day operations to third parties or outer companies that are specialized in the services that companies need.

Depending on the outsourced services, the company can delegate specific tasks in a short-term or long-term contract.

There could be many reasons why companies outsource, and we’re here to discuss some of those reasons.

Companies outsource jobs and services for several reasons. The top 5 reasons companies use outsourcing may be cost-saving, cutting back on resources, remaining on top of the industry ranks, gaining access to skills, and lessening operational risks when scaling.

Companies outsource their services to external providers to enable their in-house team to deliver the services in their expertise. Outsourcing can also give you an edge over your competitors, and there’s no doubt about it as we’ll see below.

But most of all, outsourcing paves the way to reaching goals, getting new clients and growing your business.

Because when you aren’t busy with an endless list of to-dos, you can finally get things that matter done.

If you are new to outsourcing and want to hire an outsourcing company, you might relate to some or all of these reasons.

Let us remember that outsourcing is when a company hires external help, but the reasons may, and will, vary.

Some of the most common motives, however, are discussed below:

1. Save on labor and operational costs

top 5 reasons companies use outsourcing - to save on labor costs

Labor and operational costs are some of the reasons to outsource your services.

With hiring in-house employees, you are required to provide the requirements needed to run a business properly.

As a small business, this might hurt your budget even more.

Business outsourcing gives you access to the manpower and resources you need for your operation.

Given that you don’t need to provide these resources, you can save money, scale quickly and prioritize your core business.

Finally, outsourcing opens up a whole new window of opportunities to companies.

Outsourcing gives you the opportunity to reinvest the savings into something that will actually grow the business, instead of putting it into non-growth areas like accounting, back-office, or administrative tasks.

2. Save time and effort

When non-core business functions, such as payroll, finance, accounting, lead generation, and back-office are completed by someone working for your company through outsourcing, the business’s essential resources are maximized.

As a business owner, you can better use that time by building and developing partnerships, increasing sales, and innovating service offerings while providing the best possible customer experience.

Allow your top talent to focus on a specific task to improve the quality of work and productivity that they deliver.

Outsourcing these repetitive tasks frees up your team’s time so they can take on the core aspects of their responsibilities.

3. Gain access to skills and expertise

top 5 reasons companies use outsourcing - gaining access to skills and expertise

A business might outsource to gain access to expertise and services it wouldn’t obtain otherwise.

Businesses can remain competitive with the biggest players in their industry when they realize the power of outsourcing certain aspects of their business that they lack expertise in or they don’t need to necessarily handle in-house.

With a limited budget, a start-up may lack the workload to sustain a full-time, skilled employee.

Outsourcing means that small firms can find the expert assistance they require on a part-time or even hourly basis.

4. Lessen operational risks when expanding or scaling

When you outsource your services, you also share some risks with your BPO.

For small- to mid-size companies, building your business and growing your client base are likely two of your top priorities.

The thing about administrative tasks is that they take a lot of time and money, but don’t directly contribute to these goals.

Scaling fast requires talent and one of the things that can cause issues, especially in the accounting world is the current lack of talent.

An outsourcing provider will get you the right talent and you don’t have to worry about hiring, training, and retaining top talent.

5. Free up resources

A company may need to outsource a department in order to free up experts needed on other projects.

Business expansions often require additional duties for existing personnel and outsourcing is a good solution for having too few personnel to fill the new demands.

According to Business.com, some companies use outsourcing as a way to free up capital, so it can be invested in other areas of the corporation.

Conclusion

No matter the reasons for outsourcing, whether to cut costs, grow the business, hire better talent or remain competitive, the benefits of outsourcing are perfect for middle-market companies looking to expand.

This guide here will help you choose the right outsourcing firm to help with your needs.

Alternatively, if you’re operationally ready for outsourcing right from the get-go, then check out our staff outsourcing service page on the website.

Get started today!