If you’re an entrepreneur or business owner feeling overwhelmed, hiring external help is an interesting solution. In an era where business owners carry many burdens—from developing new products and building a customer base to managing staff to keep up with the latest technology—carefully planning your strategy is a key tactic that will help your business grow efficiently.
For example, a surgery clinic skilled at influencer marketing but wanting to increase customer reach through SEO in highly competitive keywords. Instead of investing in hiring a full-time SEO Specialist to compete in this fierce market, outsourcing to external experts becomes a more cost-effective choice for the clinic.
Sixtygram Agency, experienced in providing outsourcing services to various businesses, will guide you through different aspects of outsourcing – including its meaning, work models, benefits, and important considerations.
Hiring external personnel or companies to perform certain tasks instead of using internal employees is a common practice. It is typically applied to work outside the company’s core expertise, allowing the company to fully focus on its main business activities. Engaging specialized external experts often enhances efficiency, reduces costs, and accelerates business growth.
Common outsourced work includes IT services, production, customer service, manufacturing, and digital marketing. The main reason companies choose this strategy is cost reduction, as it’s more economical than hiring full-time employees in terms of salaries, equipment costs, and other labor law considerations. Additionally, it allows companies to fully focus on their core business operations.
The concept of outsourcing first gained recognition in 1989 and flourished during the 90s. Though common in business circles, it remains controversial, particularly regarding domestic employment, as some industries may opt for cheaper foreign labor instead. Therefore, if you’re starting a business, deciding whether to use this strategy requires careful consideration.
Onshore Outsourcing VS Offshore Outsourcing
Generally, outsourcing in large companies is typically divided into 2 main forms to align with different business strategies and objectives, which are:
1.Onshore outsourcing or hiring companies within the same country to help manage certain tasks. This method focuses on leveraging provider expertise to increase efficiency and reduce operational costs. It’s suitable for work requiring close communication, understanding of local context, or having legal restrictions and data security concerns. Companies choosing this method typically prioritize work quality and management flexibility over cost savings. Examples include hiring fellow Thai designers through platforms like Fastwork or contracting Thai companies to develop websites for domestic organizations
2.Offshore outsourcing or hiring personnel or companies in foreign countries, typically developing nations with lower wages and operational costs. This method primarily focuses on cost savings, suitable for non-complex tasks that don’t require real-time communication. Large companies often employ this approach for high-volume work requiring significant cost reduction, or to achieve 24-hour operations by leveraging time zone differences. Examples include hiring Indian software developers through Fiverr or relocating production bases to Vietnam.
The division into these two forms reflects the complexity of modern business management, where companies must balance quality, cost, and operational flexibility. The choice of model depends on various factors including the nature of the work, budget, legal constraints, and long-term organizational goals. Successful companies often integrate both approaches strategically to maximize the benefits.
10 Benefits of Hiring External Help
This strategy is a method many businesses adopt to enhance competitiveness. While it offers numerous advantages, it’s crucial to carefully assess which tasks should be handled externally and which should be managed in-house. Here are 10 benefits of choosing to hire to help you make an informed decision.
1. Significantly Reduces Business Costs
Outsourcing helps businesses save substantially through economies of scale and lower labor costs, especially when hiring in developing countries. It also reduces fixed expenses such as full-time salaries, benefits, and office equipment, making the cost structure more flexible and efficient.
2. Enhances Work Efficiency
Outsourcing provides access to specialized professionals with globally standardized workflows. Their experience across multiple organizations allows them to identify and solve issues swiftly, resulting in higher-quality work completed faster than in-house teams. It also minimizes errors and boosts overall productivity.
3. Enables Business Scalability
Outsourcing provides flexibility for businesses to scale operations seamlessly—expanding during peak demand or downsizing during economic slowdowns—without the burden of managing human resources and fixed costs. This agility allows businesses to respond swiftly to market changes.
4. Creates Opportunities to Focus on Core Strategies and Expertise
Delegating tasks to external experts through outsourcing enables organizations to dedicate resources—time, personnel, and budget—toward developing core products or services that generate revenue. It also allows for strategic planning for long-term growth, helping the organization maintain a competitive edge and consistently create added value.
5. Access to Unlimited Skills and Resources
Outsourcing allows organizations to tap into professional expertise and the latest technologies that would require significant time and resources to develop in-house. This enables businesses to benefit from the knowledge and experience of specialists across various fields without the investment in training or internal team development, saving both time and budget.
6. Companies Can Adapt to Change More Effectively
In an era where technology and consumer behavior evolve rapidly, outsourcing enables organizations to respond promptly. Service providers often stay updated on trends and continuously enhance their capabilities, allowing companies to adjust strategies and operations flexibly without being constrained by internal resources or employee expertise.
7. Enables Faster Market Entry than Competitors
Utilizing outsourcing services from experienced professionals with efficient workflows significantly reduces the time needed to develop new products or services. This allows companies to bring offerings to market quicker than competitors, eliminating the need for trial-and-error or building expertise from scratch, which is a crucial competitive advantage.
8. Reduces Investment in Company Infrastructure
Outsourcing significantly alleviates the burden of investing in company infrastructure, such as office buildings, equipment, IT systems, and software. By leveraging the resources of prepared service providers, organizations can redirect their investment funds toward other areas that create greater added value.
9. Access to Innovation Without Developing from Scratch
Leading outsourcing providers continuously invest in research and development, allowing organizations to benefit from innovations, technologies, and new knowledge without having to develop them in-house. Additionally, Gain insights into best practices from the experiences professionals.
10. Enhancing Financial Liquidity
Transferring certain assets or resources to an outsourcing provider helps reduce financial burdens and improve cash flow. For example, selling IT equipment or systems to a provider and leasing them back can increase financial flexibility, allowing businesses to allocate capital toward expansion or invest in high-return opportunities.
Popular Outsourcing Jobs Today
- Information Technology Services (IT) such as Software development, Network and Server maintenance and more.
- Marketing and Social Media Services such as Online marketing, Managing fan pages and Content creation.
- Finance and Accounting Services such as Bookkeeping, Establishing Internal Control Systems and Financial Statement Analysis.
- Document Printing, Translation and Creating various printed media.
- Customer Relationship and Call Center Services.
- Office Services such as Administrative assistants, Secretaries and Document typing.
Precautions and Risk Management Strategies for Outsourcing
If you plan to outsource, be aware that it carries a relatively high risk, often ranging from 40-70%. The main issues leading to failed outsourcing agreements typically stem from misaligned interests between both parties. While clients seek high-quality work at low prices, contractors aim for reasonable profits. Clear communication is crucial to finding a mutually agreeable point. Without this clarity, the partnership may end poorly, with some cases even resulting in lawsuits between the hiring company and the outsourcing firm over failed project deliverables.
To prevent issues, it is essential to establish a clear agreement, known as a service contract for companies (when hiring a legal entity) or a freelance contract (when hiring an individual). This contract should outline the contractor’s responsibilities, objectives, and performance metrics. Both parties must agree on these terms from the outset, using them as criteria for assessing work quality.
Another aspect to be cautious about is the tendency to rush into outsourcing solely to cut costs, rather than considering long-term benefits such as business development, enhancing competitive capabilities, or expanding into new markets. When roles and responsibilities are unclear, the likelihood of problems increases. Therefore, regardless of the outsourcing approach, it’s crucial to define tasks clearly, set aligned goals, have a well-drafted contract, and foster a positive relationship between both parties. This ensures mutual benefits and smooth collaboration.
