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Oct 17
Why Businesses Are Outsourcing And Why You Should Do It Too

Why Businesses Are Outsourcing And Why You Should Do It Too

Businesses and organisations outsource non-core tasks to reduce costs, enhance efficiency, and access specialized expertise beyond their geographical location. 

Outsourcing allows business owners to focus on core functions such as product development, sales and marketing, and research and development. In addition, companies that outsource can also tap into talents abroad and save money on overhead expenses and infrastructure. 

Hence, outsourcing is a strategic move in an increasingly competitive landscape. 

What Is Outsourcing? 

In essence, business process outsourcing (BPO) refers to the practice of delegating business processes to external providers. 

This is ideal in case you’re in need of expertise that may not be available in-house. For instance, information technology (IT) outsourcing is a strategic move if you want to delegate certain IT functions to third parties. 

You can also outsource customer service functions, consultancy, services, and administrative tasks instead of hiring and training for these roles yourself. 

Key Takeaways 

Outsourcing provides many benefits to business owners who want to concentrate on their core competencies. 

By delegating non-core tasks to external partners, you can focus on your company’s growth and innovation. Moreover, you can streamline your current staff’s efficiency and focus on core activities that are crucial to your business. 

What Are The Main Features Of Outsourcing?

What Are The Main Features Of Outsourcing?

Outsourcing is a practical strategy for a growing number of business owners mainly due to the following features: 

  • Lower-Cost Expenditures – It allows businesses to function without heavily investing in infrastructure and technology, among other overhead expenses.
  • FlexibilityOutsourcing provides the option to scale the outsourced services depending on changing business demands.
  • Specialization – It enables companies to receive high-quality services and access to specialized skills.
  • Improved Focus – By offloading non-core functions, businesses have more time to innovate and further develop their products and services.
  • Risk Sharing Outsourcing also helps mitigate risks by sharing responsibilities to external providers who are better equipped at handling certain risks or technology updates.

Common Outsourcing Services: What Work Can You Outsource?

Common Outsourcing Services: What Work Can You Outsource?

You can outsource many functions depending on your business needs and goals:

Customer Support 

Instead of hiring and training customer service representatives, companies just hire external third-party providers. This makes round-the-clock support possible for customers who are located in different time zones. 

Marketing 

Businesses enhance their marketing campaigns and brand presence by outsourcing these to experts in digital marketing, content creation, graphic design, SEO, and social media. This can be more practical than maintaining an in-house marketing team. 

IT 

Meanwhile, companies often opt for IT outsourcing. Here, technology experts manage various aspects a company’s IT operations such as cybersecurity, help desk and technical support, and data backup and recovery, among others. 

Human Resources 

On the other hand, outsourcing human resources (HR) delegates functions like payroll processing, employee recordkeeping, and benefits administration. 

Data Analytics Outsourcing Companies 

There are also companies that outsource their data analytics to acquire the best data-driven insights. 

Virtual Assistance Outsourcing Companies 

Outsourced virtual assistants (VAs) provide remote administrative and office management support via collaboration platforms, email, and other digital communication tools. 

Inventory Management Outsourcing Companies 

Businesses also outsource inventory management processes. This includes ordering new stock, tracking inventory levels, and even fulfilling customer orders. 

Finance And Accounting Outsourcing Companies 

There’s also an option of delegating accounting and financial functions such as bookkeeping, financial reporting, audit support, accounts payable and receivable, as well as tax preparation.

Back Office Outsourcing Companies 

Some organisations prefer to outsource back office functions such as data entry and document processing, among other non-core tasks. 

Legal Services 

Businesses also avail of the services of external providers or law firms to handle legal research, contract drafting, intellectual property management, document review, litigation support, and compliance work. 

Logistics 

Outsourced logistics staff help businesses with transportation, warehousing, and order fulfilment. In turn, this can improve your company’s supply chain operations and cost-effectiveness. 

Business Development & Sales 

This revolves around lead generation, sales strategy development, market research, and customer relationship management. 

Labour Protection Functions 

External providers are also being tapped to help companies comply with labour protection requirements. As such, they manage various aspects of ensuring the protection, safety, and compliance of their staff within the workplace. 

Knowledge Process Outsourcing 

This involves a wide range of knowledge-intensive tasks such as engineering design, healthcare research, and financial analysis. 

Personnel Outsourcing 

Personnel outsourcing or staff augmentation involves hiring external providers such as Remote Staff to provide a wide array of services including recruitment and staffing, payroll processing, as well as training and development. 

This can also include benefits administration, compliance, and legal support to reduce the risk of legal issues. 

What Are The Disadvantages Of Outsourcing?

What Are The Disadvantages Of Outsourcing?

Although BPO provides undeniable benefits, it isn’t without its challenges.

Criticism Of Outsourcing 

Some of the most common concerns of outsourcing services include:

  • Quality Concerns – Outsourced services may not meet the same quality standards.

    This can be resolved by hiring trusted providers such as Remote Staff and setting your expectations clearly and concisely.
  • Loss of Control – Critics worry that companies may have less control over outsourced functions.

    As a business owner, you have control over which functions to outsource. Moreover, your service provider can keep you in the loop at all times.
  • Data SecurityOutsourcing can raise concerns about privacy breaches and data security.

    You can require your provider to sign Non-Disclosure Agreements (NDAs) to prevent sharing sensitive data outside your organisation. 

Examples Of Outsourcing

Examples Of Outsourcing

Outsourcing is becoming a common practice across various companies in different countries. Most organisations from different industries outsource human resources, IT, marketing, data entry, and content creation, among others.

The Philippine Outsourcing Sector 

The Philippines has become one of the world’s leading BPO hubs largely due to its rich pool of English-speaking professionals and the more affordable cost of its labour. 

Why Do Aussie Giants Outsource To The Philippines? 

Australian companies have been outsourcing to the Philippines for the following reasons:

Reduced Costs 

The Philippines offers AU clients a more cost-effective labour pool. The AU dollar goes farther in the PH, so clients are able to save on costs while still paying their outsourced Filipino staff competitive wages. 

Easy To Scale Up 

You can also increase or decrease the roles you outsource based on changing business needs. For instance, Remote Staff allows you to hire part-time or full-time Filipino staff at your preference. 

Free Up Internal Resources For Core Activities 

Outsourcing can cut down on overhead expenses like office space and equipment, resulting in reduced operational costs. 

Keep Your Businesses Running 24/7

The difference in time zones basically enable companies to operate around the clock. Hence, you can improve customer service and response times. 

Time Difference 

It is also in ideal outsourcing hub due to its 2-3 hour time difference with Australia. This makes real-time implementation doable. 

Distance 

Compared to other outsourced providers in Asia, it is relatively closer in distance. This makes face-to-face meetings (if needed) more convenient. 

Talent 

Millions of Filipino professionals are fluent in English. They also hold degrees and certifications relevant to different outsourcing services such as accounting, bookkeeping, marketing, and IT outsourcing, among others. 

Business Models 

The PH itself has a growing and diverse business landscape. Hence, regardless of your business model, Remote Staff can provide a skilled and English-proficient workforce.

More Focus On Important Business Matters 

By outsourcing, you can free up your internal teams to focus on core business functions, innovation, and strategic planning. 

Examples of Companies That Outsource

Examples of Companies That Outsource

Multinational businesses, especially large technology companies, are also known to outsource different services to third-party partners. 

Google 

Aside from being a search engine, Google also provides advertising services on the internet. It focuses on business areas such as platforms and operating systems, search engines, advertising, and operating systems. 

How They Outsource 

Google outsources some of its non-core functions like software maintenance and development projects to external IT service firms. 

Facebook 

Facebook is the world’s largest networking site with 3.03 billion registered users. It allows users to comment, share photographs, and links to news and websites

How They Outsource 

Tech-power houses like Facebook choose to retain their in-house tech programming and outsource content moderation responsibilities to their external service providers. 

Nike 

Nike, Inc. is the world’s largest athletic apparel company. As such, it sells footwear, apparel, and other equipment designed for sports activities. 

How They Outsource 

The company relies on BPO and diversification to meet its production demands. Thus, Nike outsources the manufacturing of its footwear and apparel to independent suppliers. 

United Health Group 

The UnitedHealth Group is an American multinational managed healthcare and insurance company based in Minnesota, USA. 

How They Outsource 

Healthcare and insurance companies like United Health Group usually outsource data management including medical data entry, insurance claims processing, and medical records transcription. 

Wells Fargo 

This American multinational company offers financial services. Currently, it operates in 35 countries with over 70 million customers worldwide. 

How They Outsource 

As a banking company, Wells Fargo trusts third-party experts with non-core functions such as process engineering, customer service, and payroll operations.  

American Express 

This American multinational financial services corporation is recognised as one of the most valuable companies in the world. 

How They Outsource 

American Express outsources customer service to make 24/7 customer care possible despite time zone differences. 

Hewlettpackard 

Commonly known as HP, Hewlett-Packard is an American multinational information technology company that manufactures software and computer services. 

How They Outsource 

HP outsources its PC manufacturing facilities worldwide to improve profitability and to decrease operations costs. 

IBM 

The International Business Machines (IBM) Corporation is famous for being a global technology innovator that advances artificial intelligence (AI), automation, and hybrid cloud solutions. 

How They Outsource 

IBM outsources marketing, HR, finance, procurement, and customer service to focus on product design. 

The Coca-cola Company 

Best known as the producer of Coca-Cola, the company is an American multinational corporation engaged in the manufacture and sale of soft drinks and citrus beverages. 

How They Outsource 

The Coca-Cola Company established its empire by outsourcing the bottling of its products. It also reduces overhead costs by outsourcing HR activities. 

Linkedin 

With over 930 million users, LinkedIn is the world’s largest network on the internet for building professional relationships. 

How They Outsource 

Like many other tech giants, LinkedIn outsources functions such as content moderation, customer support, and IT services, among others, to third-party vendors. 

Alibaba

Joining the previously-mentioned companies is Alibaba, a Chinese multinational technology company that specializes in e-commerce and retail. 

Alibaba opted for IT outsourcing and delegated most of its website design and development work, especially in its early days, to help the company appeal to a bilingual audience. 

WhatsApp 

Acquired by Facebook, WhatsApp outsources server management to ensure seamless and reliable messaging for billions of its users.

Basecamp 

Basecamp, a project management software, outsources its customer support to offer fast and efficient help when clients need it.

Skype 

Meanwhile, Microsoft-owned Skype outsources software development to ensure high-quality video and audio calls for its users.

Slack 

Slack is a business communication platform which outsources data analytics to personalise and improve user experiences.

Github 

On the one hand, code hosting platform Github outsources cloud storage solutions to ensure speed and reliability for its developers.

Opera 

Web browser Opera, on the other hand, outsources some of its software development to keep its browsing experience fast and secure for users.

Mysql 

This database management system outsources customer support to resolve client issues more effectively.

Apple 

Known for its consumer electronics like the iPhone, MacBook, and iPad, Apple outsources its manufacturing to ensure the timely delivery of its high-quality products.

Microsoft 

Software conglomerate Microsoft outsources customer service support to offer round-the-clock assistance, improving client satisfaction.

Ford 

An iconic automaker, Ford outsources parts manufacturing function to ensure the consistent quality and availability of their vehicles.

Amazon 

This e-commerce leader outsources customer service to manage vast user inquiries and offer timely support.

Shell 

Shell is a global energy company which outsources specialized tasks like drilling to offer safe and efficient energy solutions.

Expensify 

Meanwhile, Expensify is a finance and expense management software company that outsources customer service support to help users navigate their platform more effectively.

Walmart

This American retail giant outsources supply chain management to ensure a constant flow of products, satisfying customer demands for variety and availability.

Cisco Systems 

As a networking technology company, Cisco outsources manufacturing to maintain product quality while offering competitive prices.

Wise, Formerly Transferwise 

This financial tech company outsources customer service to better handle a growing international customer base, ensuring prompt and effective service.

Citigroup 

Citigroup is a multinational investment bank, which outsources data analytics services to provide better financial insights and solutions to their clients.

Each of these companies strategically outsources various aspects of their operations to enhance their services and satisfy their diverse client base.

Australian Companies That Outsourced And Stayed On Top 

Australian Companies That Outsourced And Stayed On Top 

BPO has also made its mark in Australia. This resulted in more Australian companies hiring external providers for non-core functions. For instance: 

Canva 

According to its co-founder, Filipino-Australian billionaire tech entrepreneur Melanie Perkins, Canva outsources graphic design, customer service, and back-office operations to the PH.  

Telstra 

Telstra Corporation Limited, the largest telecommunications company in Australia, has also been outsourcing customer service to the PH since 2014. 

BHP Group

Meanwhile, BHP Group, the second largest company in Australia’s financial sector, outsources IT services, HR functions, and accounting tasks. 

Special Considerations

Special Considerations

Here are some special considerations to take note of when outsourcing

  1. Choose the right outsourcing partner. For instance, Remote Staff has more than 15 years of experience in pairing AU businesses with Filipino remote workers. 
  2. Be strategic. Outsource the functions that would complement and support your business objectives and core competencies.
  3. Have clear and comprehensive contracts. Be clear about responsibilities, expectations, and performance metrics, among others.
  4. Implement security measures. Have a non-disclosure agreement in place to ensure data security and confidentiality.
  5. The right monitoring system is key. Service providers like Remote Staff provide monitoring and timekeeping tools for transparency. 

Is Outsourcing A Good Business Strategy For You?

Is Outsourcing A Good Business Strategy For You?

Outsourcing is a great strategy for growing your business. When implemented strategically, it can lead to reduced operational costs, improved efficiency, and unlimited access to specialized skills and resources. 

Moreover, it allows you to accommodate changing business needs without the additional cost of maintaining full-time in-house staff.  

Remote Staff Is The Outsourcing Company That You Need

For the last 15 years and counting, Remote Staff has been providing skilled Filipino remote talent to small businesses, startups, and medium enterprises in Australia and New Zealand. 

As an outsourcing company, Remote Staff can fulfill your staffing requirements for development services, consultancy, design, IT, marketing, HR, consulting, and more. 

Hence, whether you’re looking for a virtual assistant, marketing expert, or an entire team of IT professionals, we’ve got you covered. 

Frequently Asked Questions

Is Outsourcing A Good Business Strategy For You?

Let’s take a look at some frequently asked questions. 

Is Remote Staffing Different From Global Outsourcing? 

While both involve obtaining services or hiring talent via third parties, they have their distinct characteristics. 

Global outsourcing is when businesses delegate certain day-to-day operations to external providers. 

Meanwhile, remote staffing enables the same, but offers you a higher degree of control (e.g. integrating remote team members in your company).

What’s Remote Staff’s Platform?

As a remote staffing platform and outsourcing company, Remote Staff can provide a dedicated team of professionals for your business’ ongoing projects or roles. 

Aside from pooling and providing skilled Filipino professionals, we also take care of time-tracking and payroll management. 

Request a call back today and find out how Remote Staff can make remote work work for you and your business.

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