How is Outsourcing Evolving? Learn how to adapt and scale your business in 2021

How is Outsourcing Evolving?
Dec 07
Read 6 Min

Outsourcing is evolving, while always staying a hot topic. Although there are some doubts, concerns, and diverse opinions on the pros and cons of outsourcing, its influence and popularity are undeniable. Considered as a business practice that primarily lowers the costs and helps organizations scale more successfully, outsourcing established its dominance in particular business areas and segments. However, these advantages are not the only ones.

There are other valuable perks of hiring a third-party service provider. New trends are emerging and advancing the entire market. And companies’ needs are readily followed and fulfilled thanks to the way outsourcing is evolving.

The origin of outsourcing – a brief history lesson

A fairly loose definition of outsourcing could state that this business practice involves having someone who is not an employee of a company perform specific duties. And its history goes back further than anyone could think. The industrial revolution has set the stage for outsourcing particular tasks and performing some assignments offsite. Soon enough, manufacturing companies realized that they could outsource their production.

Offshoring came to life, and it included the production of different items. At this point, companies looked into the possibilities of outsourcing to obtain the most cost-effective workforce. In the 1980s’, accounting and payroll services lived up to the same fate. Companies were definitely seeing the benefits of outsourcing when it came to both services and products.

And today, with the evolution of outsourcing, organizations worldwide can pick a variety of roles and responsibilities to entrust and delegate to third-party teams and agencies. Call centers, human resources, and tech professions are among the most frequently outsourced positions. And there’s more to come.

Shifting the focus

Moving toward the future has brought multiple changes to those businesses that choose to outsource. They have switched their focus in various ways. The main thing that has changed is the way organizations perceive outsourcing and its perks. When we turn to the past and the original idea behind collaborating with third-party companies and teams, we can see that the financial aspect played a major role.

Saving money and cutting costs was the sole purpose of outsourcing for some employers. Nowadays, there’s substantial progress regarding this topic, and businesses find different motives to progress while letting external teams take charge of some services.

For example, companies outsource to:

  • Scale successfully
  • Increase productivity
  • Obtain more coverage
  • Save time
  • Become more efficient
  • Gain a competitive advantage
  • Provide a better experience to their users, clients, and customers
  • Increase RoI
  • Simplify hiring processes
  • Unlock potential and access a larger talent pool
  • Gain new skills and knowledge fast
  • Focus on several business areas

Besides recognizing the numerous beneficial aspects of outsourcing services, companies have started to delegate more core areas and roles to reliable external teams. Numerous companies now outsource their high-end processes. This way, they accomplish more than when outsourcing only small operational tasks to their partner companies.
All these facts indicate that motivation to outsource has evolved.

Massive (r)evolution of technology

Countless technological advances are transforming how businesses operate and outsource. Every progress made in this area caused the evolution of the required outcomes as well. All processes are digitalized, one way or another. Companies strive to automate everything that could drive results, save time, and provide a better customer experience or a more solid relationship with a client.

Automation usually means more efficiency and simplified processes. However, not every business should fall for the same patterns and implement the same solutions. Selecting the right tools is almost as equally significant as choosing the right outsourcing partner. Picking a digital tool or software to ease and optimize processes and services is often trickier than it seems.

It is only logical for accounting companies to replace endless paperwork with digitalized files and categorize them accordingly. Things get slightly more complex when it comes to services that traditionally feel more personalized. Customer care and customer support services providers move back and forth to determine how to balance between AI customer support and an actual human support team. Chatbots vs. live chat are simultaneously conflicted practices, while they can coexist and fulfill a mutual goal – when done right.

AI Support and human support

Before leaping into a fully automated working environment, companies must carefully examine their targets, market, audience, current customers, and potential customers. Both AI support and human support have their pros and cons. Being cautious and analytical minimizes the risks and represents a proper way to put technology in use without losing the social and personal components.

With more tech innovations and continuous growth in this domain, organizations frequently choose to outsource development. Outsourced development teams eliminate potential in-house problems, such as a shortage of specific tech skills. The technical roles and positions businesses outsource are becoming more and more demanding, and the standards are getting higher. Tech companies are noticing the financial difference and the enhancements regarding professional relationships related to outsourcing.

They found outsourcing beneficial for various business problems resolution and management improvement. And these are only a few factors that show how outsourcing is evolving in every industry and segment.

Emerging trends

Some of the increasingly popular outsourcing trends include multi-vendor outsourcing and co-sourcing. Multi-vendor outsourcing implies collaborations with more than one third-party team and external providers. Co-sourcing refers to a close cooperation between an in-house team and the outsourcing company. These teams manage the risks, handle problems and concerns, and come up with answers together. Here’s how these trends work.

Multi-vendor outsourcing

Some companies choose multi-vendor outsourcing. Collaborating with a single third-party provider has its advantages. Firstly, it simplifies the workflow and streamlines it more smoothly. Secondly, it enables a higher level of compatibility and eliminates the difficulties that could emerge from communication issues or approach and culture discrepancies. Thirdly, hiring one highly-skilled and trained external team enables faster time to market and overly guarantees more rapid solutions and prompt results. And lastly, cooperation with one outsourcing company is the most cost-effective business strategy.

Still, multi-vendor outsourcing seems to represent a trend that suits some companies’ needs. Some choose to outsource different areas and services to multiple companies. To sum it up, multi-vendor outsourcing is particularly favored among tech companies.

This outsourcing practice enables better negotiation power, often improves the quality of a product or service, offers more choices, and diminishes numerous limitations.

Single-vendor and multi-vendor outsourcing bring certain perks and resolutions. Nevertheless, every business should act according to their needs and objectives. In conclusion, before picking any of these methods and searching for reliable service providers, employers must conduct internal assessments and determine precise demands, shortages, resources, and aims.

Co-sourcing

Co-sourcing almost automatically implies building a long-term relationship with dedicated third-party staff. Aside from the strictly business-oriented goals behind choosing this sort of partnership, co-sourcing can positively influence the employees. It offers a bigger deal of motivation and cooperation between the teams. It often brings extra value.
Employers who go for co-sourcing partnerships can have more control over what’s happening. This practice enables them to monitor processes, efforts, steps, increments, and results.

More and more startups choose outsourcing

Small businesses, startups, and scale-ups are noticing the supreme advantages of outsourcing. Once reserved for large companies and well-established corporations, this business practice now has a new crowd and more purposes to fulfill. Many early-stage startups and small firms consider employing a third-party company to reduce operational deficiencies and promote their outcomes. Starting a new business from scratch means being more careful about the budget. Hiring processes, developing the employer brand, acquiring clients, or customers represent time-consuming, demanding, and costly yet necessary steps. Producing a high-quality product uninterruptedly is nearly impossible when focusing on all of these areas together.

This is precisely why small businesses and startups nowadays recognize the gains of partnering with the appropriate outsourcing company. Reducing costs, obtaining a wider talent pool, accessing more relevant skills, boosting productivity, and building better products are the reasons small businesses consider outsourcing.

Pandemic and remote work

This year made everyone more adaptable. The global pandemic has pushed businesses worldwide toward remote work. Although remote work is favored among the employees, and it comes with numerous advantages for the employers, the switch still isn’t easy. Moving the entire working environment and all duties and routines from the traditional office setup into new locations and improvised home-offices was hard.
Still, the tech evolution is encouraging every business and every market to evolve, and outsourcing is not an exception. Multiple options, tools, channels, and platforms have helped in-house and outsourced teams remain informed and motivated.

Successful and productive remote work requires excellent and timely communication. Slack, Hangouts, Zoom, and similar platforms enable colleagues, teams, managers, or clients to stay in touch and well-informed.
Outsourcing companies are adjusting to the new normal. Working remotely is becoming mandatory, and outsourcing companies have been facing challenges related to it. As outsourcing is evolving along with the market demands and global occurrences, choosing a third-party partner that feels reliable, organized, prepared, and punctual is still essential. Now – more than ever.

 

Former tech recruiter, devoted to content writing. Focused on creating unique articles and helping companies showcase their culture.

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Tatjana Zotović