Outsourcing is a common practice of contracting out business functions and processes to third-party providers. The benefits of outsourcing can be substantial – from cost savings and efficiency gains to greater competitive advantage.
On the other hand, loss of control over the outsourced function is often a potential business risk. You should consider carefully the pros and cons of outsourcing before deciding to contract out any activities or business operations.
Advantages of outsourcing
There are many reasons why a business may choose to outsource a particular task, job or a process. For example, some of the recognised benefits of outsourcing include:
- improved focus on core business activities – outsourcing can free up your business to focus on its strengths, allowing your staff to concentrate on their main tasks and on the future strategy
- increased efficiency – choosing an outsourcing company that specialises in the process or service you want them to carry out for you can help you achieve a more productive, efficient service, often of greater quality
- controlled costs – cost-savings achieved by outsourcing can help you release capital for investment in other areas of your business
- increased reach – outsourcing can give you access to capabilities and facilities otherwise not accessible or affordable
- greater competitive advantage – outsourcing can help you leverage knowledge and skills along with your complete supply chain
Outsourcing can also help to make your business more flexible and agile, able to adapt to changing market conditions and challenges, while providing cost savings and service level improvements.