by Rory Young, VP, Delegate CX
Delegating or outsourcing is an essential step for small and medium sized businesses, mainly because of its potential for growth and cutting costs. For Promo Products companies, it's a critical step in adding that extra layer of support that your team needs and that allows you to grow and scale your business more quickly.
Historically, outsourcing was seen as a key component of larger firms, such as Fortune 500 companies. Today though, any size of business can outsource tasks quickly and efficiently.
Read on to find out more about outsourcing, how to get started with it, and how to weigh up the pros and cons.
What is Outsourcing (and Why Does it Matter)?
Over time, various terms have been used to describe outsourcing, such as business process outsourcing or BPO. Offshore outsourcing is also a well-known term, as most outsourcing is conducted overseas.
Business process outsourcing means subcontracting business operations to a third-party. Initially, manufacturing companies outsourced their products or supply chain, but now outsourcing often pertains to IT and a host of other services.
Outsourcing is now more crucial than ever as businesses and services rapidly grow, and consumer demands increase for more timely operations and efficiency.
For instance, 24/7 customer service, receiving goods in a matter of days instead of weeks, or troubleshooting instantly with the click of a button on a service website—all give business leaders a competitive advantage.
Since the 1980s, outsourcing has been seen as a strategic component for large companies. However, with the introduction of cloud computing and rapidly growing technology software and services, most SMBs can now outsource, making it an essential part of their business.
As of 2019, outsourcing is part of businesses worldwide, generating $92.5 billion in USD.
As of 2019, outsourcing is part of businesses worldwide, generating $92.5 billion in USD. Out of that $92.5 billion, about $66.5 billion went to information technology outsourcing (ITO) and $26 billion to business process outsourcing.
Source: Statista, Nov 2020
Some General Terms to Know
- Business Process Outsourcing (BPO): Contracting an individual or agency to work on your behalf outside of the company.
- Standard Operating Procedures: Guidelines for your contractor to follow to ensure accountability and efficiency.
- Recruitment Process Outsourcing (RPO): A company outsources its recruitment efforts to a 3rd party, functioning as human resources.
- Information Technology Outsourcing (ITO): One of the most popular outsourcing areas where companies employ offshore contractors for information technology tasks
- Offshore: Hiring business services overseas.
- Freelancer: A person who works on a contract outside the company.
- Contractor: Hiring a freelancer or someone overseas based on a contractual agreement
The Pros and Cons of Outsourcing
Every year, outsourcing advantages become more transparent, especially when the most prominent companies use outsourcing as a tool to gain a competitive edge by reducing costs, optimizing workflows, and achieving faster response times.
In a 2020 survey carried out by Deloitte, global business leaders who outsourced regularly concluded that cost reduction was their main reason to outsource.
In addition to cost reduction, there are many other pros and cons to outsourcing. These include:
- Increases scalability and transformation
- Enhances service quality
- 24/7 coverage
- Improves customer service time and other consumer demands
- Risk mitigation
- Improves oversight
- Reduces workflow steps for better efficiency
- Security risks, especially with cloud computing
- Less control
- Hidden costs, e.g. shadow IT
- Regulation and legislative concerns
In particular, outsourcing has been in the midst of controversy, specifically in the United States. For instance, the “End Outsourcing Act” was floated in 2017 to incentivize companies to keep jobs in the United States and effectively punish those who outsource by making changes to the tax code.
The legislation gained more support in 2020 and was reintroduced in the Senate. However, it has not made any advances, and it is unclear if it will become law if ever passed by Congress.
Overall though, the pros outweigh the cons, and is particularly advantageous for SMBs in the long run.
Are you a small or medium sized business looking to outsource? We've got you covered.Schedule a meeting
Why Should a Promo Products Business Outsource?
Some businesses may not know if outsourcing is right for them and if they should outsource. However, advantages such as reducing costs, further enabling expansion and longevity in the industry are just a few attractive benefits to outsourcing.
Consider the following questions when assessing your business:
- Will my business run more efficiently to meet the demands of customers with outsourcing?
- Can my best employees focus on what they do best if we outsource certain admin tasks?
- Are there workload or burnout issues that need to be resolved?
- Is there an area where I can save money by outsourcing?
More than likely, if it can be done online, it can be outsourced. For instance, in the Promo Products industry, this could be translating customer requirements into online briefs, or checking order statuses for client updates.
Overall, there are roughly 10 different functions where small and medium sized businesses in the Promo Products industry can outsource:
- IT Management
- Administrative Tasks
- Customer Services
- Shipping and Logistics
- Human Resources
Across many of these functions, the task of gathering research and data, and moving it from one system to another, is a popular activity that is outsourced.
Whichever function you choose to outsource, rest assured it will come with many advantages for helping out your team and employees.
How to Outsource
Outsourcing is easy, but creating an outsourcing plan is more challenging. That’s why we've set up this step-by-step guide to help, known as the DCX 4D™ Process.
- Define the job: What’s unique about this job? List all the qualifications you are looking for in an individual or outsourcing firm, such as experience and education. Include soft skills, such as work ethic, multi-tasking, or their words per minute (WPM) if you need data entry.
- Deliver the right people: Once you’ve defined the job, it's time to find the right individuals or firms to delegate your tasks to. Note important questions and list answers you’re looking for in a qualified person. If hiring an agency, look at their reviews and ratings.
- Develop and train the team: This is a crucial step, as proper training and oversight are critical for an efficient team. Continually look to improve your team’s capabilities, focus on their strengths, and assess weaknesses to conduct additional training.
- Document the processes: The Standard Operating Procedure, also a written process, are the guidelines to hold your outsourced contractor accountable. The guidelines also ensure their daily work goes smoothly without errors.
Start Outsourcing Today with Delegate CX
You need a company that has experience outsourcing to meet your Promo Products business requirements. At Delegate CX, we find you team members that will quickly adopt your company’s standards and reduce your workload, providing better productivity.
Let us help you increase productivity and save time and money by connecting you with your next outsourced team members. Contact us today!
Frequently Asked Questions (FAQ)
If you are still unsure about pursuing outsourcing, here are a few frequently asked questions:
How does the hiring process work?
We will provide a questionnaire for you to fill out. From there, we will create a job description, post the job, schedule interviews with you, and ultimately hire the person that fits the best.
Can I be involved in the hiring process?
Of course, you can be as involved as you like, from reviewing resumes to even traveling to the Philippines to meet your next team member.
Will there be communication issues, such as language barriers?
Most of the team are highly proficient in English, with a moderate accent. Each candidate has a different English level, and we will ensure we test each person and provide you with English test results for your chosen candidate.
How fast can they begin working?
They can begin working whenever you like, as many are available right away. The candidates also work around your schedule, which is clear from the beginning through the selection process. From there, they can work day shifts or night shifts.
I am concerned about high turnover rates in outsourcing, will this be an issue?
We also have these concerns and ensure these candidates are paid at market rates with incentives. Also, we make it clear about schedules, company values, expectations, and more.
I believe no one else can do my job—how can offshoring help me?
Many tasks can be outsourced, freeing up time for you to concentrate on where you or your company excels. For instance, data entry, sending out emails, customer service, accounting, or small tasks are great jobs to outsource. We can help you identify these tasks and select the best ones to outsource to your new team member.