With competition so fierce and firms looking for ways to not only cut costs but also become more efficient, there is a trend for companies to investigate whether some of their previously in-house tasks can be better handled by an outside entity. Often the answer is yes. How can your business benefit from outsourcing?

Outsourcing - Business Background. Blue Arrow with "Outsourcing" Slogan on a Grey Background. 3D Render.

What is outsourcing?

Outsourcing is hiring an outside entity, often known as a contractor or sometimes a freelancer, to perform certain tasks from their own premises, whether that be a commercial property or a home office, rather than paying a full-time or part-time employee to perform it. The most commonly outsourced tasks are those that are not considered core to your business and can include fields as far apart as accountancy and graphic design.

Outsourcing works by you hiring a person to carry out a particular project. You sign a contract with them, stating their contractor pay, the timeline needed to complete the job and the brief. The contractor carries out the job, you approve it, they get paid, and there are no further costs until the next time you decide to use them. It is virtually the same process for any type of outsourcing, whether that be outsourcing your accounting, your invoicing, your payroll, your secretarial work or your marketing. There is a freelancer or contractor for every field you need. While you are hiring a contractor to handle these periphery tasks, you are free to concentrate on your core business, which is where your attention is most needed.

There are several benefits to outsourcing. The first is not having to enter the time-consuming business of recruiting, interviewing and ultimately taking on a suitable candidate for a particular role. Outsourcing means you do not have to provide office space (i.e. a desk and facilities) for an employee, nor pay a salary that has tax implications, nor provide paid leave or health benefits. This means your costs on personnel are cut dramatically.

Another important benefit of outsourcing is the access you will have to specialist skills. Often, a business takes on an employee who is, for want of a better term, a jack of all trades, capable of performing their own task but also covering other staff in their absence. While this can be a useful attribute, it often means that such employees are not specialists in any particular field. For example, if you wanted a marketing brochure designed, you could give it to your secretary to create, but they may not have design skills, so you end up with an amateur-looking brochure. Outsource the project to a graphic design specialist, however, and you have a publication that will not only look good but will also perform well. Marketing is just one area of business where it can be advantageous to give projects to experts rather than keeping them in-house.

Outsourcing some business tasks is good practice for those business owners who value specialist skillsets, who want to cut costs, and who want to focus on growing their company.

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