How Outsourcing Can Help Your Small Business

The emergence of globalization has transformed the world and brought extensive changes in every functioning sector of the globe. These tremendous shifts have sharply revolutionized the business world and forced all enterprises to reshape their strategies to thrive in today's rapidly evolving modern world.

With the pressure of fierce competitiveness, the race for survival in a vast market, and the requirement for cheaper resources has imposed the need for business leaders to shift their focus from the traditional techniques to modern and progressive solutions to build a successful business beyond the geographical boundaries.

Running a small business in the 21st century isn’t easy; the business owners may not be able to handle all the vital tasks on their own, which may easily lead to burnout, and the business growth can crumble down. Another mandatory goal to achieve is to form cost-effective decisions, which makes up a crucial aspect of small business maintenance. The most effective approach to accomplish all these objectives is — outsourcing.

What is Outsourcing?

Outsourcing is an effective business practice in which companies or enterprises hire an external organization (or ‘third party’) or member to conduct and perform certain business functions remotely that are traditionally carried out by an in-house department or agency of a company.

Outsourcing is an intrinsic component of globalization, and it has become an essential part of today’s business management on a national and international scale. Countless companies have adopted outsourcing as a fundamental strategy due to the increased efficiency and flexibility in delivering top-notch service, products, and business solutions at a reduced cost.

Surveys indicate that small businesses frequently outsource accounting (21%), IT services (20%), and digital marketing tasks (34%). The survey also shows that small businesses generally outsource operations to improve their productivity (24%) and increase their organization’s available expertise (18%).

Outsourcing has become an immensely recognized business practice in most small businesses today, with the significant benefits of achieving new levels of productivity and the given favorable economic conditions in business operations because of access to enhanced technologies and skills.

When Did Outsourcing Begin?

Business owners hire employees to perform many tasks; however, several duties have always been performed off-site. Not being able to perform specific operational business tasks because of the absence of expertise or lack of time is a part of business life. Those tasks have always been delegated to an outside expert individual or an outer organization. The view that “outsourcing is a new concept” is nothing but a myth; it has been around for decades.

In the 1950s and 1960s, the business model changed and started to diversify its corporate bases, which required businesses to develop new management skills. The term ‘outsourcing’ dates back to the 1970s when many companies eventually started seeking proficiency and productivity and began to hire workers from outer firms to handle the less essential tasks.

After the 1990s, outsourcing became a profitable business strategy as owners started placing more emphasis on cost-saving measures and decided to outsource tasks that were not part of their core business. It began to enhance the workflow. Companies were able to deliver high-quality products and services, which resulted in the emergence of external outsourcing organizations and people being well-trained in specialized professions.

How Does Outsourcing Benefit Your Small Business?

Small businesses in the United States play a remarkable role in strengthening the US economy and job creation. In 2020, the number of small businesses reached up to 31.7 million. If you’re a small business owner, you’re aware that there are business functions that you cannot or don’t want to manage on your own. Carrying out invoicing tasks, keeping up with suppliers, handling administrative tasks, etc., can put you under an avalanche of work. You cannot avoid these tasks as these are valuable and vital parts of running a successful company. Fortunately, outsourcing provides you with the opportunity to work with highly-skilled professionals and utilize their services.

It’s true; outsourcing became a widespread business practice in the 90s to tackle the rising labor costs and the rapidly expanding international market. However, many entrepreneurs do not entirely understand all of the benefits of outsourcing apart from cost-effectiveness. Consider these following outsourcing benefits to grow your brand by using additional help with your business projects-

  • Access To New Resources And Larger Talent Pool

Hiring a dedicated employee means expensive training costs, costly tools, and fixed office space requirements. You have to take up the responsibility of instructing them about the specific functions and processes required to run your business. When you outsource your business functions, you don’t have to worry about training, tools, and working space at all. Outsourcers are experts with vast knowledge, well-equipped with brand new tools, technology, and experience. Outsourcers have access to skills that you might not be able to afford on your own, and they’re always in touch with the latest industry trends and develop their skill set, time-to-time.
  • Save Time To Focus On Your Core Business

Each entrepreneur has varied skills and expertise, but they just can’t perform all business tasks and roles because of limited time and attention. Spending time on handling central functions and doing what you’re good at is the best approach, but what about the rest of the work? Don’t worry! Outsourcing is the smart option for you that allows you to focus on functions that require your core competency, and you can delegate the non-essential tasks.
  • Great Cost-Saving

Hiring an in-house employee means a full-time salary and additional benefits. But, when choosing to outsource, you pay the variable cost (a pay-what-you-need service). You will no longer have to allocate funds for power, training, and workspace. It’s estimated that outsourcing can save you as much as [20%-30% in business expenses](https://www.classicinformatics.com/blog/can-outsourcing-save-your-money-a-detailed-analysis). If you’re a small business owner, you can re-channel these savings into other parts of your business, such as upgrading your operating system, investing in content or digital marketing, etc. A company free from the recurring fixed costs is agile, efficient, and attuned to making quick decisions while adapting to new ideas and continuous shifts in the market trends.
  • Level The Playing Field For Small Businesses

Often small enterprises struggle with their finances when it comes to hiring an in-house employee or a whole team in comparison to the bigger companies. Outsourcing offers them the advantage of reaching the same level of competitiveness by gaining access to the same resources, efficiency, sale, and productivity that the more prominent corporations retain.

Which Top Functions Should You Outsource?

Organizations worldwide are continually searching for impactful strategies to streamline workflow, control the cash flow, and connect with a broader talent pool. Outsourcing allows small businesses to enjoy the same benefits and privileges as bigger companies. Outsourcing has become a way of life for many emerging companies and large enterprises.

Here are some of the top functions you must outsource to save time, cost and increase efficiency.

  • Accounting

Accounting is one of the most popular functions that small businesses prefer to outsource. Many entrepreneurs are not experts when it comes to recording transactions and other financial processes. Delegating your accounting tasks to a financial expert will save you time, increase the work quality, and have a good overview of the key financial figures.
  • Advertising, Marketing, and Branding

If you want to expand your business, choosing a competent external marketing firm can be the first step towards success. These outsourcing firms consist of skilled professionals who help you build effective strategies. Outsourcing your marketing and advertising tasks will enhance your brand image and improve your market positioning. Dig deeper into your market niche by choosing the option to outsource these business functions.
  • IT Management

The IT outsourcing industry is rapidly growing and holds a lot of importance in today’s business world. Statistics reveal that the global market for outsourced IT services [reached $85.6 billion in 2019](https://www.statista.com/topics/1900/it-outsourcing/). Hiring reliable service providers who deliver timely infrastructure solutions, IT-reliant business processes, and offer on-demand support to manage any tech issues your company faces is a great move.
  • Human Resources

Human resources include any activities related to hiring, training, or organizing the staff within your organization. Hiring agencies or a recruiting service that brings in suitable candidates for new positions and business roles is the primary type of outsourcing in this sector of the company. You can easily outsource process-driven tasks like payroll, workforce, and business administration.
  • Customer Support

As a small business, the more calls you receive, the better it is for your firm, but managing high call volume can become challenging. The good news is that you can outsource well-trained customer service agents right away. You need to hire the right agents who are well aware of your business processes and strategies.
Outsourcing and delegating your business functions can free you from overflowing workload and help you run a successful business that provides a seamless experience to your customers. By gaining the extra hours, you can re-channel it to other areas of your business, and soon you will be the owner of a well-established organization.
Author
Tripti Bhandari