There are a great many conflicting assumptions about outsourcing, making it difficult to figure out what the truth is when trying to decide if it’s the right path for you and your business. Below are the top 10 myths about outsourcing that we wanted to put straight!
- You will lose an element of control
There is a common fear that outsourcing is risky because there’s a sense of limited control. In fact, this is easily alleviated by having a firm set of process documents in place when handing over the tasks to make sure there is no misunderstanding about expectations. Outsourcing done properly should be a smooth transition and one that can free up your time to be best spent on other tasks.
- It’s only for cost cutting
There is no doubt that outsourcing can have a financial benefit, but this isn’t necessarily the only outcome or driver for companies to outsource. Often businesses decide to outsource as a result of growth not being possible in the physical location of the company; a lack of knowledge or expertise in a particular field within the business or a desire to free up time for more important tasks. Indeed, a survey by BDO found that 23% of CFOs consider the lack of skilled workers in the local economy as the greatest challenge to industry growth.
- The outsource provider has limited knowledge of your business
Contrary to the belief that outsourcing means that your tasks are in the hands of people with no connection to your business, companies who provide outsourcing services know that an important part of the service is to integrate as part of the team they are working with and offer tools and suggestions as to how to work collaboratively as partners working towards the same goal. Often the business will give training to the outsourcing provider, as they would to any new joiner in their company, which can also include information around the culture and strategy of the company.
- The output will be of poor quality
The quality of the delivery will depend on each providers’ training and development set up. If outsource companies provide a continuous improvement programme and encouraged the individuals to improve their skills within the company, this will inevitably lead to more rounded and skilled workers.
As with anything, it’s always good to shop around for options and a provider’s reputation is a good indicator to the level of service you can expect to receive, and it should never be assumed that the quality will be less than you could expect from an in-house employee. The outsourcing industry is now worth around $89 billion, so there is a naturally competitive level of quality amongst the top performing companies.
- It’s only for large businesses
There are no set criteria as to what kind of company can benefit from outsourcing – in some cases it can be more worthwhile for a smaller company of limited resources to outsource to a provider to increase efficiency and capacity as well as delegating tasks to people with a more detailed knowledge of the subject. The flexibility and consistent cost structure benefits all sizes of business.
- Outsourcing = offshoring
Outsourcing is when a company delegates certain tasks or processes to a third-party provider, irrespective of location; offshoring is outsourcing a function to a company located abroad, normally in order to save costs by transferring to a country with a more cost-effective level of pay. While outsourcing can take place in a country different to where you are, the purpose is to delegate the task rather than the location in which the work will be carried out.
- It’s a new fad
While it may seem that outsourcing is a relatively new trend, sometimes assumed as a result of recent global financial troubles, companies have been outsourcing since the Industrial Revolution – particularly accounting, legal and insurance services.
- In-house solutions are more cost-effective in the long run
Executives often assume that it’s more cost effective to keep services in-house but investing in outsourcing saves costs such as national insurance, physical desk and office space, employee benefits such as health insurance and bonuses.
- It results in job losses
Contrary to popular belief, outsourcing can actually increase the number of jobs in the long term. According to a Dartmouth Study, American businesses created nearly two jobs for each outsourced one. This is mostly due to the fact that businesses often reinvest the money saved by outsourcing into developing their current in-house infrastructure resulting in more jobs.
It has also been reported that most companies do not use outsourcing as a like-for-like headcount re-allocation, but that the employee remaining will do other, more specialised work or that outsourcing will provide much-needed capacity to an over-stretched team.
- It is a difficult process to set up
With technology advancements being as they are, outsourcing is a very simple process to set up given the amount of information and documents that can be shared via online storage applications. Irrespective of where the outsource provider is, they can be set up as one of your team in a matter of minutes with access to all the required information almost immediately.
For more on this or to find out how we can further support your business contact us.
SmartPA Partner Charlotte Frank
Charlotte had supported executives in London as a Personal Assistant for 17 years prior to moving into project management within a global investment bank. Charlotte's key skills lie in core administrative duties as well as event management, project management, research, data analysis and the creation of presentations.