There’s been a seismic shift in business over the past generation. The idea of working one’s way up the corporate ladder at one company, ending in the proverbial gold watch, has gone the way of the horse and buggy.
Careerists haven’t been stalled as much as forced onto a different track. It’s more common now to jump from one organization to the next, being loyal only to your advancement. The same can be said of most companies, which have outsourced contractors to help their bottom line and increase efficiencies.
Outsourcing is a controversial topic. It’s become political, as many manufacturing jobs that once were rooted in the United States have since been transplanted throughout the globe. But looking at outsourcing dispassionately, it becomes a strategic move, with pros and cons.
Are you or your business thinking of outsourcing? It could prove a smart move if you have the tools to manage it, or it might be a poor choice considering the structure and culture of your company. What are the outsourcing pros and cons?
What Is Outsourcing?
Just to make sure we’re all on the same page, let’s define the terms we’re using, even if they might seem obvious. Outsourcing is simply hiring help outside of one’s company. That could mean a service provider, consultant, freelancer or even an agency to manage part of your business.
Outsourcing has been around probably as long as there’s been work, but as a topic of national discussion, it grew to prominence during the Great Recession during the late 2000s. Many companies were concerned with their bottom line and employed offshore teams. Even whole departments, like call centers, were jettisoned and replaced by outsourced labor in other countries.
Of course, outsourcing doesn’t have to cross borders. We outsource all the time, such as when we go to a copy store. It saves us the expense and maintenance of having to purchase or lease a machine and the supplies that go with it.
Before you make the decision as to whether to outsource or not, there are a few questions you should ask yourself. Will this save me time? Will this help cut costs? Will contractors do a better job? There are jobs that are merely busywork, such as data entry, that might be ideal for outsourcing.
If there are jobs that are not in the wheelhouse of the team or organization, such as financial analysis or website development, then these too might prove fruitful to outsource. There’s also research and social media engagement, content creation, etc. But again, all of this depends on the organization and the range of in-house talent.
Benefits of Outsourcing
So, let’s look at some of the pros of outsourcing that are usually true regardless of the type of company.
Don’t Have to Hire More Employees
The most obvious advantage of outsourcing is that your company doesn’t have to take on the burden of a salaried employee. Yes, a freelancer or contractor tends to get a higher hourly rate because they’re not getting the benefits package offered to full-timers, but you don’t have to train them or pay liability, health and workman’s compensation insurance.
Also, all projects have an end, and if you’re hiring for a temporary job then you don’t have to go through the whole rigmarole of laying someone off. It saves money in the long run, which is the whole point. Work orders are a great tool when outsourcing because they help you define what will be done, how much it will cost, and how long it will take.
More Talent to Choose From
Want ads only go so far. Most companies are based in a specific region, and full-time workers are going to live within a radius of that site. While there is usually a concentration of skilled workers around large urban centers, these might not be the sort of skills you’re looking for, or the company might be in a less densely populated region.
And if you’re looking for a very specialized type of help, then a wider net is going to help. More teams are working remotely today, and the idea that you can hire outside the city, state or even country is not only more acceptable, but it’s also more practical thanks to online collaboration tools.
Reduce Labor Costs
Besides having fewer employees, there are other labor issues that draw companies to outsource. One is that not all contractors get a premium for their services. Depending on the work they do, and where they do it, the price of their labor could be substantially lower than what you would pay for similar work within your organization. One thing to take into consideration, though, is if the reduced labor costs will impact the quality of your product or service.
Disadvantages of Outsourcing
According to Techsunite.org, over 500,000 jobs have been outsourced since the turn of the millennia. That’s a lot of work that has gone elsewhere, and for a reason, but there are red flags to look for before deciding that outsourcing is right for your company.
Lack of Control
You can tell your contractors what to do, but they’re not your employees. That can create some problems in terms of leading a team successfully. For one thing, if the contractor is not on-site, then you’re going to have less access to them and not be aware if they go off-track until it is potentially too late to fix. Communications can suffer and, depending on your management style, a lack of physical presence might create a less productive environment.
This brings us to our next point, which is communications, one of the foundations of any successful enterprise. As noted above, communications are crucial. Without a clear line of communication, directions can get muddled.
So, are you outsourcing a person or team who works in the same time zone? If not, are their work hours going to match up with yours, so you can stay in real-time contact? Then there’s the method of communication, be it in person, phone, email or chat, which might rely on the outsourced individual or team having a reliable internet connection. If communications are problematic, then outsourcing might not be right.
Danger of Poor Quality
Finally, there is the quality of the work being outsourced. You can save time and money outsourcing, but if the quality you deliver is less than that required by your stakeholder, then you’re in trouble. Therefore, if the quality isn’t there, outsourcing is not a viable direction for any organization.
Additionally, think about how outsourcing might impact the whole company rather than just its bottom line. For example, outsourcing might impact the morale of your organization, and quality will suffer, as will employee retention. You don’t want your full-time employees feeling threatened, confused or upset by workflow difficulties due to outsourcing.
Whether you decide, to outsource or not to outsource, there are tools that can help. ProjectManager is a cloud-based project management tool that is ideal for working with outsourced teams, be they in-house or remote, because it has a real-time dashboard and an online Gantt chart to keep everyone on the same schedule. If you don’t outsource, ProjectManager can still help by offering a great collaborative platform for teams to work more productively and efficiently together. Either way, try it and see for yourself by taking this free 30-day trial.