Today’s business environment is anything but certain, and it’s also unprecedentedly competitive, especially in such industries as e-commerce, healthcare, and tech. To stay ahead of the competition, businesses have no choice but to employ a variety of strategies, including outsourcing.
Long gone are the days when the one thing everyone knew outsourcing for was fast-fashion companies unfairly exploiting underpaid workers in third-world countries. Today, it’s a legitimate and highly effective business practice that can help businesses stay afloat even in the most challenging market conditions.
Access to Expertise
Aside from the cost reduction, the number one benefit of outsourcing is that it allows businesses to tap into a pool of specialized talent that may not be available in-house. Even bigger companies can’t possibly hire separate kinds of experts for all types of operations. It’s even more challenging for smaller ones.
By outsourcing specific tasks, such as those that require unique technical knowledge and skills, businesses can improve their performance without having to manage extra in-house teams. They can rely on third-party service providers like SupportYourApp for customer care outsourcing. Or, they can delegate their app development to software design companies to leverage their tech expertise, which is what Slack did with MetaLab in its early days.
Increased Efficiency and Focus
When businesses outsource their non-core activities, they can focus on their main areas of expertise and streamline operations. As a result, they achieve higher productivity and better resource allocation. The time and resources that would otherwise be spent on the processes that a company doesn’t necessarily excel at can instead go into product development or strategic planning.
Why does this make sense for businesses? This way, they get to maintain what is referred to as a “lean team,” meaning a small-ish, streamlined team that operates efficiently without unnecessary bureaucracy and resource waste. That’s how WhatsApp became such a success story back in the day despite having a very modest team of only 55 people.
Scalability and Flexibility
Outsourcing makes it much easier for businesses to scale up or down, depending on their current needs and the state of the market. They quickly adapt to the changing environment without the need for constant mass hiring or layoffs. This is especially relevant for businesses that experience seasonal fluctuations in demand (which, let’s face it, applies to most businesses).
One of the relatively recent examples of the positive impact of outsourcing on businesses’ scalability would be Zoom during the early months of the COVID-19 pandemic. As we are all well aware, Zoom experienced an unprecedented explosive growth in spring-summer 2019. Outsourcing such functions as customer support and data center operations was what helped the company scale its services rapidly without compromising quality or performance.
Improved Risk Management
Finally, outsourcing can act as a buffer against operational disruptions. Businesses routinely deal with immense amounts of uncertainty, so occasional glitches in internal resources are almost inevitable. Relying on external providers—especially for critical functions like IT support or supply chain management—is an effective risk reduction strategy.
After Marriott International faced a massive data breach in 2018, which affected over 500 million guests, it outsourced parts of its IT security and data management functions to specialized cybersecurity companies. Not only did this step improve Marriott’s cybersecurity but it also allowed the company to focus on its core operations, which reflected positively on the company’s performance.
The Bottom Line
The complete list of the benefits of outsourcing is way longer, but some of the key ones are access to specialized expertise, increased focus on core activities, scalability, and risk mitigation. Multinational corporations and smaller companies alike, including Slack, WhatsApp, and Zoom, are using outsourcing as a source of competitive advantage and a mechanism for dealing with the uncertainty of today’s market.
