Most businesses outsource at least one service. In fact, 37% of small businesses outsource a division of their business processes.
Quite simply put, outsourcing is an agreement between two parties where one is hired to perform or carry out a specific role, activity, or duty that is not completed internally. The agreement can be between an individual or a company and the service provider is generally remunerated for services performed or tasks completed unless an alternative arrangement is reached.
It was initially defined as a business strategy in 1989 and really found its stride in the 1990s. However, there is still some contention regarding whether outsourcing is good or bad for local economies. Some feel it’s taking away domestic jobs and hurting the local economy. In contrast, others believe that it helps to contribute to a free market on a global level, helping to boost efficiency and remain competitive. But one thing is for sure; there is a place for it in today’s business sector.
It is mainly used to reduce operational costs, however, there are various reasons why outsourcing can be used. For example, technological advancements or abilities locally cannot compete globally or is not at the standard needed to accomplish a task or demand. So now that we’ve answered the question, “What is outsourcing?”, let’s take a look at the different kinds of outsourcing, how outsourcing works as well as some of the most commonly outsourced services in 2023.
Types of Outsourcing
There are various options when it comes to outsourcing:
- Onshore — outsourcing services from a local company/freelancer.
- Nearshore — outsourcing services from a company/freelancer in a neighbouring country in the same time zone.
- Offshore — outsourcing services to a company or freelancer abroad in a different time zone.
There are various pros and cons when it comes to choosing the type of outsourcing that matches the needs of your company.
How Outsourcing Works
To make outsourcing a successful venture, it’s important to foster a good relationship and treat it as a partnership. It’s also essential to set clear expectations and parameters of the project in the agreement so that both parties are aware of what is expected of them. Generally, a meeting will take place between the business and service provider to discuss all of the above before drafting a formal agreement. It’s also important to agree on a rate or fee so that you can budget accordingly.
Top 12 Outsourced Services
1. Information Technology
We live in the digital age — so it stands to reason that the demand for information technology services is growing at an exponential rate. In fact, 92% of G2000 companies have reported outsourcing their Informational Technology (IT) duties/roles. It is particularly popular for small businesses to outsource their IT as it helps reduce costs substantially.
2. Web Design and Development
A well-designed and functional website is vital to any brand. It’s what helps differentiate you from your competitors at glance. Web design and development is a highly specialized skill which is why you really don’t want to skimp on budget when outsourcing, at least not in the initial stages. This could include anything from the logo of your brand to the actual visual layout of your website. The reality, though, is that start-ups and small businesses simply don’t have the need for a full-time or in-house web designer or developer.
3. Social Media Marketing
Presence is key, and social media marketing is probably one of the best ways to raise brand awareness and increase your reach. But there are effective and ineffective ways to navigate social media. Social media marketing revenue is estimated at over 137 billion, with a 25% growth year-on-year. Users resonate with transparency, and trends change yearly as different platforms continually add or change features. For this reason, having a professional handle your social media account management is essential. Suppose you are a small to medium business. In that case, it is a great idea to outsource your social media marketer as there may not be enough tasks to fill a full-time social media marketer’s role in the beginning stages while growing your business.
4. Human Resources
Human Resources (HR) is an integral part of any company – especially as your business begins to grow. But when first starting out it may be in your best interest to outsource HR and payroll functions. It is important, however, that you outsource your HR functions to an onshore service provider. This is because every country has specific labour laws that need to be adhered to.
5. Call Center/Customer Service
Whether your goal is to generate sales or take care of the relationship with existing customers, having an in-house call center can be costly. To reduce overheads and improve efficiency, outsourcing customer service and telemarketing roles can be a huge advantage. By outsourcing offshore and onshore, you may be able to easily offer round-the-clock service – which could give you the edge over your competitors and help boost your brand image.
6. Digital/Content Marketing
This is probably one of the most commonly outsourced services today and is also one of the most important, especially if you feature in eCommerce. If you want to reach your customers on a fundamental level, you will need content for your website, landing pages, email campaigns, video scripts, blogs and more. Digital and content marketing is at the forefront of driving sales – when starting out, you may not be able to afford a full-time writer//editor, in which case outsourcing digital content can only work in your favour.
So once your content has been written, what about being found in the millions of web pages on search results pages (SERPs)? The short answer – SEO. But don’t let this fool you, as SEO is by no means a quick or finite process. Search engine optimization, or SEO, is the key to being found online and can be on-page and technical SEO. Both are skills requiring years of experience and strategies to harness their true abilities. And because search engines, like Google, are constantly upping their standards and updating algorithms, you’ll need an SEO consultant on hand at least every six months to run an audit to determine which areas need improvement.
Accounting is probably one of the most commonly outsourced services. From tax consultations to financial planning and day-to-day bookkeeping, outsourcing your accounting will not only free up your team to focus on their core tasks. Hiring an accountant or financial professional who specializes in this field will also reduce the chances of making critical errors that could affect areas where you simply can’t afford them to – most importantly, your bottom line.
9. Data Security
Data security is probably one of the most important services you can outsource. The confidentiality not only of your clients’ details but your company’s intellectual property is at risk. Data breaches often equate to brand damage and substantial financial loss, which is why data security is so vital for any company, big or small.
Recruitment and onboarding are two key roles, especially since more and more companies have gone remote, making both slightly more challenging. And because you won’t be recruiting as part of a daily function, it simply makes sense to outsource your recruitment functions.
11. Legal Services
This is usually a service outsourced onshore, purely because each country has a specialized legal system and your legal professional should be licensed to perform legal services in that country. Because the likelihood of you actually requiring legal services are so slim, it makes sense to have a legal professional on retainer.
12. Management Consulting
Whether it’s streamlining communications or improving day-to-day business functions, management consulting is another top outsourcing service for 2023 that can help boost revenue. Bigger or developing businesses will benefit from outsourcing this particular service as it will determine how to structure your core team members to allow them to run efficiently and focus on their talents on what they do best and specialize in.
The most commonly outsourced services in 2023 lie within the technology and innovation, marketing, customer service, human resources, finance and design sectors. Although the possibilities for outsourcing non-core tasks are vast, and these are certainly not the only services that can be outsourced to increase productivity and efficiency and help boost sales, these 12 services are trending and where we have seen most companies, whether small or large invest their budget.