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Outsourcing will occur when a company decides to contract some of its functions to another organization to help get specific job responsibilities done. This can happen when a company needs help finding the right employees to do the job, is short-staffed, doesn’t have time to complete the work, or would like to save money and delegate to get the work done.
For example, a company may need CFO help, but only part-time. They will fully outsource CFO services to another individual or company rather than paying a full-time CFO professional and providing them with wages and benefits. Outsourcing allows the company to pay for only what they need.
It is unlikely you will lose your job due to outsourcing. Most companies outsource because they need help finding an employee to do the work or take the load off some current employees. You will still have job security, even if your company outsources some work since the outsourced work is typically tasks that you would not do for the company in the first place.
What is Outsourcing?
When a company hires another individual or organization to do some of the business processes, this is known as outsourcing. They may outsource marketing, programming, customer service, cleaning, or bookkeeping — you will not lose your job because you are not doing these tasks for your business in the first place. Hiring someone to do the work is more economical for your employer than having a full-time employee do it.
Some companies can outsource a small project to an independent contractor to help get it done, especially if it is a very specialized project. Others can hire a major firm to handle the work. As the company grows, they may become more efficient when they outsource the work outside the organization. This occurrence is most common for handling customer support.
A company can also choose to do offshoring, which is when it will outsource to another country. If the business maintains operations within the same region, yet contracts work from a foreign entity, this is when offshoring comes into play. Both methods can provide benefits to a company, but there are some potential problems they may face, as well.
Reasons A Business May Outsource Jobs
There are many reasons a company may choose to outsource jobs. Some of them may mean that an outsourcer could take over your role. Still, most of the time, outsourcing is done to help the team of a company become more efficient.
Often a company wants their primary employees to focus on something other than cleaning, for example, and the industry seeks to hire a full-time cleaning crew. Outsourcing this work can help them keep the office clean at an affordable rate.
Companies can outsource functions for many reasons. These include:
- Cost: Depending on the activity, it can be less expensive to outsource it. If the work is only needed once or for a few hours a week, it may make sense to outsource to someone else to get it done rather than paying a full-time employee to do the work.
- Access to skills: A company can decide to outsource to gain access to more skills than they have on their team right now. If a specialized project needs to be done, they can outsource to someone else with those skills. This may be a one-time event, so hiring a professional and outsourcing the work for it can make sense.
- To help the team: If there are extra projects or a few team members need to have an extended leave, outsourcing some of the work temporarily until they come back may make sense. This ensures that the most necessary work finishes on schedule without putting too many demands on your current team.
- Manufacturing capabilities: Your company may do great at marketing and designing a product for the customer but may need more manufacturing capabilities to do the work. The company can outsource the work to help them get the product designed.
- Taking advantage of different time zones: Many companies find that they can get more work done when they outsource to different time zones. An investment bank in Sweden can get the reports out faster when they have editors in the U.S. work on them while their European customers are asleep. You can outsource some of your customer services to other parts of the world to keep it open 24 hours without keeping people there late at night in America.
Can Outsourcing Be Bad for Businesses?
While a business can benefit from outsourcing some of their work, a few issues may come up when they choose to outsource to others. First, outsourcing leads to a need for more control. When you outsource to someone else, they may not give it the same time and attention you will. The outcome may be different than you desire, and some managers may need help to give up control over the project.
Companies that outsource the wrong type or amount of work may also encounter some customer problems. Your customers aren’t interested if you have outsourced your job or if you have the work done by your employees. They care whether the work meets their expectations.
If your outsourcing produces mediocre work or fails to meet the standards of the customer, it can harm the reputation of your business. Managing your own team is often a better way to handle your customers than outsourcing and running the risk the work won’t be good.
The Bottom Line
Outsourcing can benefit many companies, but workers can feel worried that they will lose their jobs and that outsourcing will take away job stability. Roughly 4.5% American jobs are outsourced each year. Your employer may decide to outsource some of the work they need done, but this is often for tasks they don’t want their central team to handle specialized tasks or tasks that someone else can do more efficiently. Most employers like having their regular staff nearby to manage customers and to work together as a team, providing you with some of the job security you need.
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