What are the benefits of outsourcing?

Towards the end of the 1980s, many companies started to opt for outsourcing. With the right providers, they could enjoy the benefits of outsourcing such as a higher competitive score and greater flexibility. Do you also want to outsource some tasks of your business? NEWAKEY offers you a variety of services. But first, read on to learn more about the outsourcing process.

What is outsourcing?

Outsourcing is the equivalent of outsourcing in English. In principle, for a company, outsourcing is the action of subcontracting part of its activity. In other words, it is to call upon an external provider to entrust the management of certain elements of its business, and all this is done under contract.

We can cite the following different types of outsourcing:

  • The business: IT, human resources, finance, marketing, communication;
  • Geographical area: onshore outsourcing and offshore outsourcing.

By outsourcing, the company can focus on high value-added activities, while saving time. You will find here our solutions to help you choose which activity to outsource!

What are the objectives of outsourcing?

As you have read above, the purpose of outsourcing is to help a company focus on its core activities, namely: financial, material and human resources. It also allows the company to increase its efficiency and to improve itself. Indeed, delegating ensures quality work. 

In addition, the main objective of outsourcing is to reduce production costs. Why is this? Because the service provider provides services at a lower rate than those assumed directly by the company. 

One outsourcing strategy most often used is the offshoring strategy.  This consists of outsourcing to countries with low living standards. Some companies take advantage of this to pay low wages. 

However, it is important to understand that “tertiarisation” and “outsourcing” are two different phenomena. For a short parenthesis, the phenomenon of tertiarisation consists in the migration of certain service activities from industry to the tertiary sector.

What are the types of outsourcing?

In principle, outsourcing comes in 3 types.

Offshore outsourcing

Also known as External Process Outsourcing, offshore outsourcing is the practice of companies using the services of external providers in another country. It is the most common form of outsourcing. Offshore outsourcing can be applied in several areas of a company: 

Nearshore outsourcing

This other form of outsourcing consists of using the services of a service provider located in a neighbouring country. The service is provided in the same time zone and in a similar historical, cultural and linguistic framework. Nearshore outsourcing is primarily intended for companies that are looking for fast productivity solutions, but also for solutions in proximity and that meet the following criteria: 

  • Quality service at low cost; 
  • Similar time zone ; 
  • Project management techniques similar to those used in business; 
  • Excellent cultural understanding.

Onshore outsourcing

In contrast to offshore and nearshore outsourcing, outsourcing involves using the services of a provider in the same country as the client company. With onshore outsourcing, interactions between teams are much easier and the workload is much better coordinated. However, these criteria are available at a higher cost. 

Through onshore outsourcing, the company can enjoy the following benefits: 

  • Preventing communication problems;
  • Wider network to choose the right provider; 
  • Ease of finding labour ; 
  • Preservation of intellectual heritage.

Why is outsourcing an advantage for SMEs?

Now, find out the benefits of outsourcing for SMEs.

To reduce costs and better control your budget

Through outsourcing, the company gains flexibility. Since the service provider adapts its service to the company’s objectives and expectations, the company exchanges fixed costs for variable costs depending on the activity. In addition, outsourcing allows the company to reduce its inventory and long-term investments, as well as the provider’s salary.

To focus on your core business

To avoid the need for restructuring, companies are constantly looking for performance, value and optimization. And all this because they have to be increasingly responsive to impending changes in the economy.  

In this case, the company calls on external service providers so that the internal teams have to specialize in the company’s core business. 

To ensure flexibility and continuity of service

By outsourcing activities, there is no sickness or prolonged downtime within a company. It guarantees the continuity of its activity. Examples include: 

       ➤ Outsourcing payroll management creates internal stability; 

       ➤ The outsourcing of a switchboard generates a continuous service to the customers. 

To gain in quality

Outsourcing often involves specialists and experts. These service providers are up-to-date with the market. They then provide the company with best practices to, firstly, bring a level of quality that it does not have and, secondly, make it more efficient.

To develop a skill

Outsourcing enriches the companies that use it, because they benefit from the services of service providers specialized in their business. The latter bring them, through this subcontracting, skills that they would not have been able to develop due to lack of means or time.

Thus, the expertise of external service providers provides them with know-how that can help them to go further on subjects such as human resources or IT management, for example.

By collaborating with our outsourcing agency NEWAKEY, you can only enjoy our advantages!

What are the disadvantages of outsourcing?

Outsourcing can also have a certain limitation:

  • By delegating part of its activity, the company obviously loses control of it. Outsourcing can also lead to divergent interests between the two parties, or even a relative lack of involvement. This loss of control adds a degree of uncertainty. However, the development of a clear road map helps to anticipate this risk;
  • The company also loses its autonomy. Outsourcing implies a kind of dependency. If the mission is not respected, the company is in difficulty. It must therefore plan to call on another company as a matter of urgency by analysing the various offers beforehand. Like logistics, other activities are subject to variations in the environment, such as production. The outsourcing of a strategic function therefore requires a study of the possible risks;
  • there is sometimes a lower level of commitment or professionalism on the part of the subcontractor;

How to outsource an activity?

1 - Identify the needs of the company

First of all, it is necessary to define the real needs of the company with its objectives by asking the questions: Why outsource? How to outsource? Who to call upon? How long will it take? Which service? Where (outsourcing)?

2 - Establish a specification

The specifications clearly indicate the tasks assigned to the service provider and their order of priority. It will include a complete presentation of each outsourced function. It will then be much easier to ensure that the company is on the same wavelength as the external service provider.

3 - Choose a provider

The choice of provider is the key step that contributes to the success of the outsourcing process. It can be done in professional platforms. The business owner should take the time to compare the skills and experiences of the candidates, as well as the opinions of the clients they have already worked with.

4 - Drafting a contract

A contract must be drawn up to define the basis of the collaboration. It must include: 

  • Mission details;
  • The tools to use ; 
  • Internal company procedures ;
  • The timeline of the collaboration; 
  • The price of the service.
5 - Define a mission tracking system

For the smooth running of the missions, the online tools can be very useful:

  • Google Workscape;
  • Trello; 
  • Asana;
  • Skype ;
  • Slack;
  • Dropbox. 
6 - Prepare for backsourcing

At the end of the contract, the company plans to return to the internal processing phase of the outsourced assignments. This will make it easier for the company to deal with contingencies in case of unsatisfactory performance.

Contact us!

Now it’s up to you! Do you want to work with a reliable and committed partner?  NEWAKEY is a marketing agency full of experts. With our team, you will be satisfied! The quality of our services allows you to maintain your credibility. Our goal is to accompany you. So don’t wait any longer, take the first step and contact us! You will be surprised to see our seriousness at work and especially our expertise.

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