Should You Outsource? 5 Myths, Facts, and Figures on Outsourcing

Outsourcing has become a popular method of doing business. However, there are still some who are skeptical about its benefits for businesses.

In an effort to clear things up, we have listed down some of the most common myths about outsourcing with explanations on why they are simply not true, and other facts about outsourcing.

Myth # 1: Only large-scale businesses benefit from outsourcing.

Fact: People get this misconception because they see many multinational corporations that have entered into outsourcing contracts. However, the truth is that even small businesses can benefit from it.

For instance, small businesses that have very little to no space in their office to house employees will benefit from just hiring freelancers who can do their work at home. Technology has made communicating with workers from all over the world easier.

In an article for Entrepreneur, Laura Lee Sparks, owner of a small business called Legal Marketing Maven, says that more small businesses are outsourcing tasks nowadays and that “by outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income.”

Myth # 2: Most companies only outsource to reduce costs.

Fact: There is no doubt that one of the driving factors for the decision to outsource is the reduction in costs. In fact, in the beginning, this was the main reason why companies choose to outsource. One survey supports this notion saying that 44% of its respondents outsource in order to reduce costs. However, it’s important to note that those who focus solely on cost fail in the end.

Other top reasons for outsourcing include gaining access to resources unavailable internally (34%), free up internal resources (31%), improve business or customer focus (28%) and accelerate company reorganization or transformation (31%). In the end, aside from cost reduction, what outsourcing really does is help businesses become more efficient.

Myth # 3: Outsourcing only means call centers.

Fact: Call centers to do form part of what outsourcing can provide in terms of customer service. However, customer service tasks are not the only functions that can be outsourced. In fact, studies show that 70% of companies outsource one or more of their strategic business functions.

The top tasks currently being outsourced are bookkeeping, social media marketing, payroll, administrative support, research, and marketing. However, IT remains the most outsourced activity accounting for 60% of all tasks being outsourced.

Myth # 4: Outsourcing means losing jobs.

Fact: In order for a business to be truly efficient there must be higher final output with less input. That’s what outsourcing brings to the table. By outsourcing certain parts of the business to other countries, for example, companies are actually able to provide jobs and help the economy of those nations.

A great example of this would be the growth of the Philippine economy brought about by outsourcing. The country’s BPO industry now employs about a million people and has made the country the second top outsourcing destination in the world.

Myth # 5: Outsourcing is a one-way street.

Fact: Some business owners are hesitant to outsource out of fear that it will lead them to lose control of their business in the future. That should not be the case. In fact, a successful outsourcing contract is built around the premise of a partnership between the client and the service provider. There must be a genuine commitment between the parties to work together in order to achieve business goals. The key here now is in finding the right partner.

The bottom line is that outsourcing can provide many benefits to businesses of all sizes. The important thing to remember though is that you must do as much research as you can to figure out if it will be beneficial to you and if so, find out what you have to do to make it a success.

Infinit-O is the trusted customer-centric and sustainable leader in Business Process Optimization to Small and Medium businesses in the Financial Services, Healthcare and Technology sectors by delivering continuous improvement through technology, data and people.