From boosting customer satisfaction to improving operations, Grace Lau of Dialpad shares how outsourcing can help solve common business challenges.
As a business, it’s ok to admit when you may need a little helping hand here and there. In fact, it may be highly beneficial to do so.
Outsourcing means businesses can delegate menial tasks to third-party companies and concentrate their efforts on more pressing matters, such as customer satisfaction and generating a profit.
But what is strategic outsourcing, and how can it help you overcome common business challenges?
What is strategic outsourcing?
Strategic outsourcing is when a company delegates internal tasks to a third party. This can include anything from a single business process, to a set of procedures, to a whole project, in some instances.
So, why do businesses like the idea of outsourcing their work? The idea is to save time and money and refocus that attention on resources that will benefit from more observation. It can optimize production processes while reducing costs associated with the company’s daily tasks.
Many roles, such as human resources or IT, are frequently outsourced to third parties. Essentially, the outsourcing provider can take care of processes the business does not have the time or expertise to oversee.
The ultimate goal of outsourcing is to utilize external resources so that the technologies and experts can improve the efficiency of the company and its competitive advantage.
Another increasingly popular form of outsourcing is the use of virtual assistants, who can assist with tasks such as scheduling, data entry, and customer support. This allows businesses to focus on their core competencies while still benefiting from the added support and cost savings that outsourcing provides.
Types of strategic outsourcing
IT
Outsourcing IT typically involves subcontracting an external specialist or IT company to care for all or part of a business’s tech needs. They are used in industries such as law, hospitality, and more. Their support ranges from software development to maintenance and support.
As we know, IT is essential for most businesses today. Companies in various industries have IT requirements or, at the very least, need assistance on a technology level. For many companies, it can be more cost-effective to contract a third-party IT management team than to create an in-house one. Companies often use IT outsourcing services to store and manage their data, although some businesses only outsource a fraction of IT functions.
Manufacturer
It may come as no surprise that manufacturer outsourcing services can be rather industry-specific. For example, a catering machine manufacturer may have an outsourcing agreement with an industrial-scale bakery or wholesale food business. This could include building and maintaining all of the equipment. Outsourcing arrangements like this can significantly reduce costs and improve assembly time.
Without the help of third-party outsourcing companies, many businesses may struggle as they lack the economies of scale that allow them to keep up with competitors. Fewer companies have the money and resources to invest entirely in equipment, personnel, and technology to stay up-to-date with the current market.
Professional outsourcing
Professional outsourcing refers to outsourcing from a company with a critical set of skills or knowledge, including legal, accounting, IT, and copywriting. It’s a popular form of outsourcing because there is potential for high-cost savings.
Outsourcing professional services means the company only spends on the services provided by the external business, while enjoying access to high-quality resources that can help to significantly reduce overhead costs.
Process-specific outsourcing
It’s common for a business to outsource specific operation-related aspects to other companies that specialize in that area. For instance, a jewelry designer can outsource the delivery of their goods to a courier company like UPS.
A contract like this would involve the jewelry maker supplying details on delivery timelines, customer contacts, and costs and using a tool such as Inventory Planner for lead times. This allows the business to focus on more customer-facing tasks, such as improving customer service and reducing wait times.
Project outsourcing
A popular strategy for many businesses is outsourcing projects rather than a whole department. This can be useful if the company receives work from clients but doesn’t have the personnel to complete the tasks.
In some cases, the company may not have enough employees with the necessary skills to work on a particular project or task. It could also cost more to complete the project internally than to outsource to another, more experienced team or company.
6 benefits of strategic outsourcing
Every business is going to have its challenges. Here are some ways strategic outsourcing could help you to overcome them.
1. Improved security
Managing security risks is one of the most crucial IT challenges for modern businesses. In fact, many organizations have fallen victim to a security breach due to their lack of expertise in what is known as data science and its associated technologies.
Unfortunately, cybersecurity attacks aren’t going away anytime soon, so businesses need to think ahead and develop a strategy that may include security outsourcing.
By relinquishing in-house security systems and appointing outsourced IT services as the primary security, a company may gain insight into its network security vulnerabilities that they otherwise may never have been able to spot.