Apr 25, 2019

Why do you need to start outsourcing technical tasks today?

By Elia Fedorovski

5 benefits of Outsourcing Tech Work.

Nowadays, outsourcing has become a direct consequence of a constantly changing business philosophy. Prior to the 1980s, there had started a gradual turning towards a more profound business model that favored the acquisition and diversification of companies and business interests for the purpose of mitigating risks across a wide range of corporate activities. Although, more and more companies realized that there were virtually no or limited advantages to running a large cohort of unrelated businesses, and thus many of them began to get rid of the subsidiaries and re-focus their efforts on business areas that mattered the most. The main focus became identifying and nurturing core competencies that would bring them to new heights in terms of competitive advantage. Today, outsourcing is getting utilized more and more by companies, small businesses and larger corporate entities, because they are the ones who know that using outdated technologies and being unable to comply with government regulations due to in-house incompetence, and lack of expertise, can easily lead to disaster.

Those companies that do choose to outsource complicated technical tasks do that for a number of reasons, all of which are rooted in a sense of realization that profitability and efficiency are key companions of success. However, successful outsourcing is not simply a question of whether you are willing to hire someone to do a job for you, but it is also about understanding the organizations capabilities, limitations and future goals. The idea behind outsourcing is to allow the leadership to focus their attention on the things that matter the most. In order to do that, and before going down the road to outsourcing tasks in the first place, there are certain points we must consider. In the following, we are going to investigate 5 benefits and advantages of outsourcing by highlighting some companies that successfully utilized such practices to become profitable in a relatively short time.

Advantages of Outsourcing Technical Tasks

1. Saving costs : When a company decides to outsource a specific task to a vendor, it does so because that vendor specializes in a given function and is capable of performing that function more productively and effectively than the company in question could. This decision, in turn, saves time and money for the company. A good example is Kid’s Headquarters, a large importer of children’s apparel from New York. The company teamed up with a vendor called Weber Distribution that handled the company’s West Coast distribution and warehousing needs. This transitioning to a paperless warehousing environment and leveraging Weber’s management system has enabled Kid’s Headquarters to improve visibility, increase inventory capacity and improve cash flow substantially.

2. Headcount reductions (Staff level) : Headcount reduction is another reason why companies go about outsourcing. Minimizing fluctuations in staffing due to demand changes in light of products or services is of primary importance, especially in case of a small business that operates with 10 people or less. Reducing the workload on the employees is also a useful practice in freeing those employees to either take on additional moneymaking projects for your business or provide them with development opportunities. The only way a company can do that is by outsourcing tedious tasks, so that more important in-house business activities can be carried out more efficiently. This is probably one of the most important reasons why companies play with the idea of outsourcing in the first place.

3. Focus: There have been many examples of companies who outsourced tasks for the direct purpose of eliminating distractions and actually force themselves to focus on their core competencies instead of always being burdened by tasks that could be done in half the time and for half the money. This can be especially useful for start-up businesses where there are just too many distracting elements to begin with. Hercules Inc., now an almost $2-billion global chemical manufacturer, managed to identify and determine its core improvement opportunities by changing its approach to outsourcing the technical aspects of logistics. Since transportation and logistics were not considered core competencies (they were not the Focus of their activities), they decided to outsource their entire transportation function to one single provider named Odyssey Logistics & Technology.

4. Morale: There is nothing more frustrating than when your business lacks internal expertise and dedication when it comes to non-core tasks. This fact alone can easily result in poor attitudes, poor performance and poor morale. Now, there is a solution to mitigating such problems. You already guessed it: outsourcing. Skype and Klout used a team of developers to help build their business and get their technology up and running. Appsumo is an excellent example of how a company can successfully outsource multiple non-core tasks: Appsumo hired freelancers to fully manage their marketing, content and IT tasks.

5. Knowledge: Some experts claim that outsourcing computer programming and other IT functions are excellent ways of gaining access to new technology and expertise. Small businesses and startups are the ones who have much to gain from this practice. On the one hand, they can save a lot of capital by gradually developing in-house expertise to maintain high-level technological operations. On the other hand, gaining access to the latest technology can help smaller businesses compete with larger companies. Companies who have utilized such practices include Squawker, Jpay.com and Net2Text that all used outside talent to build and maintain complex technical tasks and platforms.

When it comes to doing business both online and offline, it is particularly troublesome to keep up with all the specialized skills and resources needed to succeed in such a crowded world. Website Development, Design, Search Engine Marketing, Content Marketing, Supply Chain Operations, Social Media Marketing or Graphic Design are just a few of the many skills that a business must implement to even stand a chance at staying in business. Even if you are a one or two-person company, and you are an expert in all the skills mentioned above, there is going to be a point when you will not have the time to manage everything by yourself. There is only so much hours in a day that you can spend on your business, that is. No matter which direction you go (outsourcing or doing everything by yourself), at one point, you will face a complicated decision: do you hire someone to do the job in-house or outsource it to a specialist in another company? Having outlined the long-and short-term benefits in this article, the answer to that question pretty much presents itself. What will you choose?

Similar posts:

Virtual Restaurants  

By Miloš Čitaković  
Business Analytics  

The Software Development Fund  

By Elia Fedorovski