How Outsourcing Influences the Employee Churn Rate Leveraging Outsourcing and Scaling Your Company Successfully

Employee Churn Rate
Oct 19
Read 4 Min

The churn rate calculates the number of people leaving an organization over a particularized period. This term can be applied in many contexts, including business, HR, and Information Technology. Churn rate is an essential factor in outsourcing. Now, let’s see how to leverage outsourcing and lower the employee turnover rate.

 

What is employee churn rate?

 

Employee churn rate refers to the general turnover in a company’s personnel as existing employees abandon their positions. A high churn rate will most likely unfavorably influence earnings and deter the company’s growth. A reliable and well-organized workforce grows the company’s gains, which gets fully indicated in return on investment (ROI).
This is why churn rate is one of the crucial business metrics. And outsourcing can represent the ideal tool for enhancing the results.

 

How to calculate employee churn rate?

 

The employee churn rate can be determined by dividing the cumulative number of employees who quit within a specified interval by the number of employees in total. Most companies consider quarterly or annual turnover rate calculations to be the most valuable ones. The figures that will enable you to do the monthly estimation include the numbers of active employees at the beginning of the month, the end of the month, and the number of employees who left the company within that timeframe.
You would reckon the average number of employees by totaling your beginning and ending staff members and dividing it by two. After that, you need to divide the number of employees who left by your average number of employees. Multiply it by 100 to know your ultimate employee turnover rate.

 

Outsourcing done right

 

The quality and reliability of an outsourcing company can be easily perceived through their employee churn rate – which is closely connected to their clients’ employee retention. Several constituents create a stable and durable working environment. Outsourcing companies need to be extra dedicated to their employee retention strategies .

 

Lowering the employee turnover rate can be achieved by:

 

  • Carefully selecting new employees and avoiding miss-hiring
  • Being competitive and providing excellent working conditions to employees
  • Encouraging employees and showing them the appreciation
  • Being as flexible as possible without missing the deadlines or causing any issues regarding clients’ needs
  • Helping employees expand their skillsets and regularly obtain new knowledge
  • Conducting performance reviews and giving feedback to employees
  • Offering the employees to move their career up within the company
  • Emphasizing the importance of company culture

 

Companies that choose the right outsourcing partner unequivocally feel the beneficial influence of this cooperation and obtain the best possible results. Partnering with a knowledgeable outsourced team with strong company culture and core values affects the employee experience and reduces the churn rate. Happy employees equal excellent retention. Employee satisfaction and loyalty lead to better relationships with clients and customers.

Outsourcing and scaling

 

Outsourcing reduces the costs concerning purchasing the new necessary equipment and minimizes expenses for non-core parts of the business. However, financial advantages are not the only benefits of outsourcing. Outsourcing offers other perks that help companies scale successfully. It enables companies to grow functions, aptitudes, productivity, and results without hiring several new in-house employees. In addition, there are numerous ways to leverage outsourcing to scale your company.

For instance, this is how adequately leveraged outsourcing services can impact company’s progress:

 

  • You would be achieving an immediate scale in your business sector that would be high-priced or challenging to increase rapidly.
  • You’d skip the growth expenses and losses and the entire learning process that the outsourced service provider had to undergo to build and strengthen their team.
  • Outsourcing means obtaining new mastery, skills, and expertise; the outsourcing company has well-trained and organized professionals on board who will make up for the shortage of experience or knowledge in the in-house team.
  • Outsourcing companies take charge of the internal investments and keep their staff up to date; they follow the market needs and remain informed; outsourcing companies train and educate their employees continuously.
  • Picking an outsourcing partner that evolves and matures over time helps companies scale efficiently.


Overcoming scaling problems


Some of the key business elements can be severely affected by growing pains. Firstly, potential threats include the budget and its inevitable alterations and reductions. Secondly, you should focus on the risk of premature scale that disables companies to focus on their goals and the damage caused by wrong estimations and market predictions. Moreover, using outsourcing empowers businesses to scale with efficiency.

In conclusion, outsourcing services eliminate the most time-consuming duties from the in-house team members, provide new skills and fresh approaches, and add new ideas and insights.

 

For example, cooperation with a fitting outsourcing company guarantees:

 

  • Reduced costs
  • More productivity
  • More focus
  • Faster time to market
  • Better results
  • Increased employee satisfaction
  • Better customer experience
  • More financial gains
  • Makes it easier to acquire new clients or customers
  • Long-term collaboration with customers or clients (and increased CLV)
  • Better employee retention and lower turnover rate

 

Scaling within an outsourcing company

 

Certainly, fast growth comes with sharp growing pains. Most importantly finding the ideal solution to the problem is to partner with a company capable of scaling teams at the pace that suits the client. Therefore, the possibility of trouble-free scaling within an outsourcing company is a valid option for numerous businesses.

 

In addition, this is precisely the case with our client, who placed a whole back office with us, including sales managers, operations team leaders, etc. The right way to deal with explosive scaling is to consider this type of outsourcing partnership. All it takes is to create a systematic approach and a suitable strategy, followed by out-and-out training and mentorship. In short, deep familiarity with the market a client and customers come from is necessary for reaching the business objectives.

 

The effect of employee turnover on a small business

 

Employee turnover is one of the most used HR metrics. Unfortunately, it usually leaves a negative nuance. This effect is primarily caused by high costs related to high employee turnover rates. In addition, poor employee retention strategies are unaffordable. Not to mention that bad results in regards to employee churn rate can shut down a small business entirely. In other words, dissatisfied employees seek new job opportunities.
This is where, partnering with an outsourcing company can help small businesses scale triumphantly.

There are countless advantages of outsourcing for small businesses, and it plays a significant role in your company’s growth. To sum up, outsourcing decreases repetitions and disorganization. It certainly makes it easier for an employer to appropriately understand the internal needs and scale.

 

For instance, the principal pros of outsourcing for small business scaling can include:

 

  • Maximized employee productivity
  • Cost-effective partnership
  • The opportunity for new investments
  • Shifting the focus to areas that demand it
  • Outsourcing can lead to new marketing ideas and opportunities
  • Accessing an extended talent pool and obtaining new skills
  • Streamlined processes
  • Painless growth

In conclusion, outsourcing lowers the employee turnover and improves employee retention, which above all, results in more satisfied clients and more firm bonds with customers.

Are you ready to scale?

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

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Tatjana Zotović