Why Do Companies Choose to Outsource Work?

Written by
Rebecca Smith

Published
Jul 19, 2018

Jul 19, 2018 • by Rebecca Smith

Having an in-house team is great. You can be flexible, adapt quickly to change, and encourage strong teamwork.

So, why do companies choose to outsource work?

More than half of US businesses choose to outsource some of their operational tasks. From saving money to improved expertise, there are a number of reasons to consider using external suppliers for business productivity.

If you're wondering whether you need to hire more staff, take a look at these six reasons why outsourcing could be the answer.

Why Do Companies Choose to Outsource Work?

Outsourcing saves businesses money--but why?

1. More Results-Driven Teams

An in-house team costs money every day, whether they hit a target or not. An outsourcing company that handles a specific task for your business has a contract with you to deliver on certain goals.

The financial incentive to hit targets means that an outsourced team will deliver results more quickly too. This is especially true if their commission is uncapped.

2. Lower Tax and Employee Benefits Expenditure

In-house staff comes with many added expenditures for an employer. Taxes, employee benefits, workstation overheads, and added running costs contribute to the bill.

An outsourced company manages their own employees. Your business only pays for their time and skill without footing taxes and benefits for more staff members.

3. Expertise for Specific Tasks

An outsourcing company will specialize in one or two areas of business, such as call handling and customer service. They hire people with experience to do the job, and they carry out the same tasks every day.

You're hiring knowledge and expertise with an outsourcing company. You'll gain access to a pool of experts for the same cost of hiring just one or two in-house staff.

4. Focus on Core Competencies

Outsourcing tasks to external suppliers allows your in-house staff to focus on core competencies of the business. This will improve overall efficiency.

For example, outsourcing your debt recovery tasks to a specialized call center means your finance team can focus on existing revenue and investments.

5. Only Pay When You Need to Outsource

Some tasks, such as digital marketing campaigns, will be ongoing for any business. Read more here about why marketing agencies improve your year-round revenue.

Other tasks, such as end-of-year tax returns, will be time-specific. By outsourcing, you won't need to hire an in-house staff member on a temporary contract. This saves you time and money on the recruitment process and employee benefits.

6. Change Suppliers to Suit Your Business Growth

It's much harder to move around, hire, or fire in-house staff when your business model adapts to growth and change. An outsourced supplier is a different story.

If your supplier is delivering unsatisfactory work, you can change or end the contract. If your business needs alter and your supplier can no longer deliver what's required, you can find a different outsourcing company.

Using outsourcing companies means you can change your business operations as it grows and develops. Then you can draw on relevant expertise at the time you need it. You can also change or negotiate contracts year-on-year to save money and improve efficiency, too.

More Ways to Improve Your Business Efficiency

So, why do companies choose to outsource work? It saves time and money while increasing the skill set of a team, either temporarily or throughout the year.

Want to know how to make your business even more efficient?

Read this guide with top tips to improve your company productivity.