What is outsourcing and what are its benefits?

Just over a couple of decades ago, the word outsourcing was not taken in a good context. For American corporates, it meant they are unable to get a job done in house and exporting their jobs to the third world countries such as India and Pakistan, China.

With the increasing cost of labour in the US in the last two decades and the competitive work done by the labour in India and Pakistan, outsourcing began to pick pace in the early 2000s. Even though with outsourcing, companies lose money as the money is going out of the company rather than circulating in-house, outsourcing benefits have multi-facets.

Let’s take a look at some of the benefits of outsourcing and the reason it is done at a small as well as big organization level.

You can get more jobs in your company.

If you own a firm, you have employees with a certain skill value. As a business, to refuse a new opportunity is bad but, with outsourcing, you can task someone outside your company with that particular skill set.

You can keep a certain percentage from the job and pay the third party for getting the work done. This model is very lucrative for freelancing, packaging, manufacturing and many other industries. If you have good outsourcing partners, you can increase your organizational skill set by using your partners’ services and getting more jobs done.

You will never have to refuse any new opportunity.

Companies refuse new opportunities because they are not scaled for them. Every organization has a fixed skill set focusing on the company’s charter. if a new opportunity is offered, they can not get the job done because they lack that skill set. With outsourcing, if you have skilled partners aligned with your company, you can use their services, give them jobs. This way, you can get more work done, make more money and will not have to refuse any new opportunity.

No In-house expenses.

One perfect example of outsourcing is drop shipping, you do not need to have an office, pay utility bills, pay salaries of your staff. In short, you avoid all in-house expenses needed to run a small company. That burden is shifted to the outsourced company to get the job done for you.

Less risk in running a company.

Outsourcing could be a one-time affair, you hire someone for a job and if you do not like the work, you can replace them. The emergence of freelance marketplaces such as Upwork, Guru has solved this problem. You can hire skilled contractual resource. This takes away the hassle of hiring your own employees, spending budget on their training and the hassle of paying salaries, taking care of their insurance and other fringe benefits.



Written by Hisham Sarwar


That is all you ever need to know about me but let me warn you, freelancing for me is a journey, certainly not a destination :)