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The Cons and Pros of Outsourcing: All You Need to Know

 

Have you ever wondered what the real cons and pros of outsourcing are? You might find it a bit challenging to decide if outsourcing is right for you.

Maybe you have never tried outsourcing before. Maybe you have had a bad experience or heard horror stories of terrible things that have gone wrong for other people who have outsourced different tasks. That’s why we are here!

In this post, we’ll go over the major pros of outsourcing. We’ll also give you the honest truth about the cons. You will need to consider both sides before choosing to outsource work for your business.

What Is Outsourcing?

Outsourcing is simply sourcing talent to do work for you from outside your company. Outsourcing is a business strategy that companies use to hire service providers from overseas as well. 

Business process outsourcing, or BPO, may be a more familiar term. Many larger companies have used BPO services over the decades. BPO refers to contracting out different areas of business operations to a third-party vendor. This began as a way to do manufacturing more cheaply. Today, and this is actually one of the pros of outsourcing, any business can outsource any task that can be done online.

Outsourcing is also the simple act of hiring talent from overseas to complete work that you have in your business. Common terms are virtual assistants, freelancers, and hiring platforms like Upwork, Fiverr, and FreeUp.

What Are the Pros of Outsourcing?

A scale to represent weighing the pros of outsourcing against the cons.

Outsourcing can help you to get around the time-consuming hiring process. If you hire correctly, you can even avoid the larger part of the training process, too. You can hire new talent as needed and keep your businesses growing.

Pro #1: Cost Savings

One of the most impactful pros of outsourcing is the cost savings you can enjoy when hiring from overseas. Because many other countries likely have a lower cost of living than your country, the labor costs are also lower. This means that you can enjoy a big reduction in labor costs.

Sometimes you can save up to 50% of what you would pay when hiring locally.

Of course, this varies greatly depending on the skillsets and level of experience you need. You will also pay more for greater reliability and trustworthiness.

You can hire freelancers directly these days, or you can use an agency or marketplace. When you hire through some kind of outsourcing company, you will pay more because you get additional benefits like security and customer service.

When you hire freelancers, you are not obligated to provide them with insurance or benefits. You also do not need to rent office space, pay for monthly internet service, or provide them with equipment. This is huge cost savings right off the bat. 

Hiring freelancers and outsourcing agencies can be a lot cheaper than maintaining full-time employees. You can contract with them for fixed-price, one-off projects, sure.

The amazing part is hiring them for daily, hourly work that you can stop anytime without worrying about severance pay. If your needs include a lot of project-based or short-term work, the cost-effectiveness of overseas freelancers will definitely one of be the biggest pros of outsourcing for you. Short-term hires also allow you to focus on core competencies. 

One of the less well-known pros of outsourcing is its flexibility in terms of temporary company expansion to take advantage of seasonal peaks in demand.

You simply hire when demand is high, like for this upcoming eCommerce holiday season, and not worry about keeping them on after things quiet down. You can also hire expertise as needed. This leaves your regular teams free to focus on the core areas of the business to keep it running smoothly. There’s no risk of hurting your success, only the opportunity to make good on a period of high demand. This scalability is especially useful for bootstrapped startups.

Pro #2: Ability to be 100% Remote

Aside from cost savings, remote work itself is one of the main pros of outsourcing. Particularly during the past couple of years, many businesses relied on remote work to survive. It simply would not have been possible for them to continue operating as profitably as before without the help of remote teams. 

Outsourcing offers more than just the willingness and ability to work from home, though. Freelancers and remote agency workforces are used to working remotely. This means that they have the complete set-up to operate efficiently, such as backup equipment, internet, and even work locations. They know all the possible issues involved with remote work. More importantly, they know how to deal with them so that no issue affects business operations.

When you are running an international eCommerce business, for example, a remote workforce is only logical. Particularly for multi-stores that run on different languages, you can use the help of native speakers for customer service. Customer support working in a different time zone can also be supremely beneficial.

For you as the owner, think also about a personal assistant who comes in a few hours before you start your day and gets your email inbox cleaned up for you and your calendar set up, and all that. I’m sure you can think of other ways that an overseas intermediary can provide you with essential services.

Pro #3: Access to More Talent

When you are open to hiring from anywhere in the world, the realm of opportunity immediately bursts wide open for you. You can choose from a wider pool of talent with top specialization and still pay less than you would when hiring locally. This is one of the juiciest pros of outsourcing because you can not only hire experts, but you won’t have to break the bank doing it.

Cons of Outsourcing

Obviously, we believe that there are more pros of outsourcing than cons. This is why we are in the business! But being in the business means that we have weighed both sides carefully. Below you will find the honest disadvantages of hiring outside your company. 

Con #1: Harder to Communicate All Online

If you are not used to communicating online, it can take some time to get used to it. Luckily, this con is not a deal-breaker. Just make sure that you set aside time to get your communication down before you need any remote hire to work independently. You want to avoid poor communication or a lack of communication with and among remote hires that will delay projects and cause errors.

If you need help with communication remotely, join Outsource School for all of our tips and guides that we’ve been using for years to manage teams across the world.

Con #2: Different Time Zones

You can take advantage of people working in different time zones, but it can be tricky when you need to meet with them. Again, however, you can work around this.

You simply need to know their time zones and get clear on what times they will be working. This way, you can also work out an overlap between your working hours and theirs so you can jump on a video call now and then to keep things running smoothly. 

You can also recruit specifically for virtual assistants and freelancers that can work on your time zone so that the communication isn’t as much of an issue. It will take some more recruiting, but it’s 100% possible.

Con #3: Require More Training Sometimes

Every business is different, so every new hire must go through onboarding. When you are hiring from a different country, through, it can mean a greater learning curve. Your culture may have regular business practices that another culture is not used to. Make sue that you lay everything out on the table before you make a hire. This will help you to avoid any surprises.

Again, if you need help with this aspect of outsourcing, check out Outsource School for all of our guides and templates.

Examples of Tasks to Outsource

How to Profitably Outsource Tasks to a Virtual Assistant1

The best tasks to outsource are technical tasks that require specialized knowledge and simpler tasks that you should not be paying high wages for. Below are some examples.

  • Graphic design and technical drawing
  • Product development
  • Quality control (from overseas manufacturing to webpage functionality)
  • Website optimization
  • Content creation
  • Information technology (software and app development, telecommunications, customer service)
  • Bookkeeping and accounting
  • Data entry and research
  • Administrative tasks
  • Marketing
  • Legal services 
  • Recruitment services and human resource development

How Do I Get Started Outsourcing?

Two people shaking hands to agree to outsourcing.

We want you to start your outsourcing journey with minimal risk. This is why we recommend a planning period before you go off and just start hiring people. Jumping the gun will almost always lead to overwhelm. 

First, make sure that you have enough time to outline exactly what you need in each area of your business.

Second, communicate that clearly to potential hires. If you’re using a marketplace, put together an organized brief that you can post to attract the most suitable candidates. The more work you put in at this stage, the better your chances are of attracting better talent. Just like you wouldn’t want to hire a sloppy worker, a top-tier freelancer is not going to be interested in a sloppy employer.

Third, prepare to interview intelligently with a system in place to rank candidates and choose the best one. Finally, make sure that you have enough time to properly onboard new hires. Don’t hire ten people at once if you don’t have the capacity to get them ready to work.

Want our proven recruitment, interviewing, and hiring processes? Join Outsource School and dive into our most popular course, Cracking the VA Code.

Conclusion

The pros of outsourcing definitely outweigh the cons. Whatever we have come up against in our own outsourcing journey, we have found a great solution to. This is why we built Outsource School! We absolutely love outsourcing and love to help other businesses to learn how to take advantage of this goldmine. 

If you want to master outsourcing and use it as a tool to grow your companies faster and more profitably, join Outsource School and get our years of experience within hours of watching our courses and reading our playbooks.

By Julia Valdez

Julia is a career freelancer and agency owner turned coach for those seeking abundance and victorious living. A professional teacher and decades-long lover of the art of words on paper and the stage, she loves sharing actionable advice on life-changing topics. When she’s not helping freelancers and other small business owners grow, you can find her sharing lots of laughs over little crazy things.

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