Can established businesses still benefit from outsourcing?
Outsourcing is often associated with small scale businesses and start-ups who lack the people-power and financial resources needed to conduct parts of their operations in-house. Google ‘benefits of outsourcing’ and you’ll scroll through page upon page of search results relating to small businesses, but what about larger ones? Do well-established companies and enterprise-level businesses also benefit from outsourcing in the same way as smaller scale start-ups? We’ve set out to answer this question, so read on to find out more.
What kind of services do enterprise-level businesses outsource?
Nowadays businesses can outsource virtually any part of their operations. An external marketing agency can handle brand awareness and marketing campaigns, sales can be outsourced to lead generation services, designers, IT support workers, and technical leads can be found across the globe working from their laptops, even services such as office catering, cleaning, security, and reception monitoring can all be outsourced to specializing agencies. The pool of possible outsourcing services is diverse and expansive, and so the question isn’t really what kind of services do enterprise-level businesses outsource but rather, who do they outsource to.
Who do enterprise-level businesses outsource to?
Enterprise-level companies require many of the same services as start-ups and small businesses but what sets them apart is that they need these services supplied on a much larger scale. Marketing budgets can easily reach six figures per campaign, and lead generation needs to happen en-mass and IT consulting services need to be supplied to teams containing hundreds of people need to be supplied to teams containing hundreds of people, whatever the service provided to a start-up or even scale-up business it needs to be amplified ten-fold to be able to cater for enterprise clients. To be able to cater to such high demands, handle the quantity of work required and manage the budgets set requires a more established service provider, which is why enterprise clients tend to work with agencies who have proven themselves reputable amongst large-scale businesses rather than solo freelancers.
What benefits do established businesses get from outsourcing?
The mere existence of outsourcing agencies who cater to enterprise clients is evidence that outsourcing must provide some sort of benefit to big-businesses. If outsourcing provided no benefits to businesses, then outsourcing simply wouldn’t exist. So what can they offer?
Just because enterprise-level businesses are operating on a much larger scale doesn’t mean that they’re not conscious of cost and where they could be making savings. Outsourcing can provide huge savings in a number of areas by providing:
Access to lower rates
By outsourcing to an agency abroad in a country such as India, companies can have skilled work conducted by employees on a far lower rate of pay. It is estimated that companies who outsource work to India see on average a 60% reduction in their wages costs. Of course, using less expensive labour also comes with its disadvantages and companies must weigh up what they could lose in the pursuit of these savings.
A flexible service
Should an enterprise-level company focus on hiring a team of individuals in-house during a busy period, this can ultimately cost them a lot of money if the business then slows down, resulting in them paying full-time wages to their in-house employees who no longer have the same amount of work to do. Outsourcing enables businesses to scale up and down the services they need as and when they need them, saving money.
Although employees are technically paid for providing their service, an external outsourced agency often takes this responsibility a whole lot more seriously, after all, the business is their client and not just acting as their boss. With this mentality in mind outsourcing often helps to improve efficiencies and can help enterprise businesses to access the quality of service they want.
Access to skills
Regardless of the size of the business, recruitment and training are both costly and time-consuming, and there’s no guarantee that the hired individual will have the skills they need to do their job well at the end of it. Outsourcing bypasses the common issues of recruitment, giving businesses instant access to some of the most highly skilled people in their industries. This is especially helpful for areas such as IT and tech that are currently experiencing a skills shortage. For employees in-house it can be hard to stay ahead of the game and to remain vigilant of changes within their specialism, this can lead to internal teams falling behind on trends allowing room for the competition to get ahead. External agencies are often far more committed to ensuring that their employees are up-to-date and trained in the very latest trends, enabling them to deliver a market-leading service to their clients so that they can remain ahead of their competitors.
Another significant benefit that large-scale enterprise businesses can gain from outsourcing is the ability to work on a global scale, even crossing time differences. Outsourcing to agencies abroad can enable global businesses to effectively have opening hours that span 24 hours of the day which is particularly helpful in areas such as customer service and support. Global outsourcing is also highly beneficial for companies who are building up offices over-seas enabling them to run as a fully functioning team in the interim between hiring the right individuals abroad. In certain aspects of business, such as marketing, outsourcing to an agency in the country for which you are marketing too can also bring regional advantages. Local marketing agencies are often far more likely to understand their local audience and how best to target them successfully.
As mentioned briefly under cost-saving, outsourcing also provides enterprise businesses with the ability to rapidly scale up or scale down areas of their workforces to suit demand and to facilitate large scale expansion. The ability to rapidly scale up a team to meet rising demand can often make the difference between a business succeeding or folding under pressure. Whereas small businesses can bring on one or two people to help during demanding times, enterprise businesses must rely on the assistance of entire agencies, and can also scale up and down the service they receive from those agencies as appropriate.
All companies, both big and small want to avoid risk. Outsourcing projects, or tasks such as payroll, to an external party can enable companies, regardless of their size, to give away a portion of the liability and risk associated with the project to a third party. This allows the business to focus their energy and efforts elsewhere, safe in the knowledge that someone else is handling the associated risk and liability for them.
Are there any disadvantages of outsourcing for large-scale businesses?
Although outsourcing clearly provides a number of substantial benefits for large-scale businesses, it is not without its risks. Some of the most common disadvantages of outsourcing include:
Issues with service delivery
One of the most common fears even large scale businesses have with outsourcing is that what is promised will not match up to what is delivered. Of course, this can also happen in-house between teams and employees, and there are a number of ways to manage the management and communication between outsourced third partied to reduce the risk of issues with service delivery.
For enterprise companies, confidentiality is often a high priority and some may fear that they put their confidentiality at risk when dealing with external parties. Outsourcing confidently even for confidential matters requires a level of trust but is also often legally protected. Most third party outsourced agencies take confidentiality very seriously and will sign non-disclosure agreements regarding confidential content.
Of course, another common worry for enterprise companies who are outsourcing is that the third party agency could at any point dissolve or break off their agreement. This degree of instability can be worrying and is another reason why enterprise companies tend to prefer working with larger and more reputable outsourcing agencies.
A compromise on quality
Finally, specifically in relation to outsourcing offshore, it’s important to recognize that although it may be possible to find services at a fraction of the price abroad, they may not be able to deliver the same quality service as a more local provider. Using low-cost, poor-quality services can damage a companies reputation ultimately costing them more to put right. One of the most common areas in which this is seen is in customer service where enterprise companies outsource their telephone lines to employees across the globe which enables them to advertise 24/7 support services. Although the telephone lines may be open out of business hours the service provided is often less than satisfactory due to language difficulties and this ultimately leads to less customer satisfaction.
So can established businesses still benefit from outsourcing?
It is clear that outsourcing is not a service whose benefits are limited to small businesses or startups. Any size business can benefit from using outsourcing services so long as they are also aware of the risks that can be associated with them and take the necessary measures to mitigate them.