Published on January 28th, 2021 | by Sumit Bhowal0
The Role of Outsourcing in Global Business
Outsourcing is the process of hiring professionals outside your company to provide services or create products that would ideally be done in-house by your company’s staff. Often, outsourcing is done as a measure to cut operational costs. This strategy is feasible for small and medium-sized companies that are looking to expand their business operations abroad. Outsourcing plays a major role in the growth of businesses that are taking it up. Here are four roles of outsourcing in international business:
1. Reduce and control operational costs
The global marketplace is a competitive arena thus you have to be strategic to stay in business. One of the most effective ways to do this is by outsourcing. Certain services such as data entry, translation, or document processing are costly and time-consuming to perform in-house. For companies operating on a large budget, they can retain such services. However, for small businesses that desire to have a chance to compete in the global market, that is where outsourcing comes in. So how does outsourcing help you control and reduce costs? This strategy allows you to only pay for the services only when you need them. This way, you avoid making large investments in software, infrastructure, and personnel. Money that you save from outsourcing can help you with your growth investment plans. While one of the roles of outsourcing is cost reduction, you need to be careful not to impair the quality of services that you want.
2. Improve scalability
For example, consider hiring employees to handle customer service duties in your company. You will have to spend time and money to recruit and train them. While this might seem feasible during the peak season, it may be impractical when that phase is over. The great thing about outsourcing is that you can do it on a “needed” basis. Recruitment outsourcing enables your global business to scale up fast with a team of trained professionals that can handle your workload. The good thing is that you can choose to scale down when you want to. You can engage PEO service providers to get you the talent you want to help you run your business. PEOs help you scale up by recruiting and managing your staff. This way, you direct your energy on the core operations of your business.
3. Increases agility
Outsourcing gets you access to new technology that can only be found in the global market. While changes in technology are nothing new, they affect each industry hence the need to outsource to stay agile. But what is agility? Business agility is the continuous, rapid, evolutionary, and systematic adaptation of entrepreneurial innovation that helps you attain a competitive edge in business. When you outsource, you succeed in making your business more agile given that you do have to incur any capital expenditures to do it. So, how is this possible? Suppose you are outsourcing customer services, they come with their call services technology and software. Thus, you do not have to pay for it separately. The only thing that you have to do is familiarize them with your products and services so that they know what they are working with. These service providers that you outsource will continuously provide you with the technology that you need while working as an extension of your business.
4. Risk-sharing advantage
Each investment has a certain amount of risk involved in it. In the global platform, in particular, government rules and regulations, markets, financial muscle, technologies, and competition can change rapidly. Such changes present potential risks to your business that can make you shut operations. However, when you have outsourced services, you might salvage your business should things be on the verge of collapsing. This is because the company or firm that you outsource services from shares some responsibility in completing the tasks that you have assigned for them. In certain instances, the firms that you outsource may help you make decisions that will minimize such kinds of potential risks.
Outsourcing in the global market levels the playing field such that both big companies and small ones have similar access to the same expertise, economies of scale, and efficiency. This strategy plays a vital role as it helps you cut costs, improve scalability, agility, and offer risk-sharing benefits. Thus, outsource today to have a chance of global success!