What Benefits Does Outsourcing Bring?

Outsourcing a service involves delegating part of the business activity of a business to a third party. This has a number of benefits and drawbacks, and it is important that the self-employed consider them.

What Is Outsourcing?

Outsourcing is a business process whereby a business transfers responsibility for its external tasks to another company specialized in that task.

Therefore, the subcontracted company is one that, through an agreement with another client company, carries out certain activities and services. This commercial relationship requires a link between both companies through a contract.

Outsourcing is the process of hiring an external company to complete a service or an aspect of the business.

Benefits Of Outsourcing 

Outsourcing a service brings a series of benefits and provides certain competitive advantages. However, it must be borne in mind that a long-term change in dynamics is intended. Do not expect immediate results. Benefits are:

Costs:

A subcontracted company has the ability to offer prices lower than the costs involved in carrying out a task on its own, since being specialized in this field and operating on a large scale its expenses are lower, which allows offering the service to the lowest possible price.

Volume Flexibility:

Since markets are characteristic of fluctuating and undergoing constant changes, the demand for a product or service may increase at specific times. In this sense, the self-employed have the possibility of facing this market demand by taking charge of satisfying this increase in demand by himself or by resorting to subcontracting. This allows the business to protect itself against out of stock.

Technical Or Financial Capacity:

An important factor to take into account is the capacity of subcontracting companies to contribute aspects that the client company lacks. In other words, small companies often do not have sufficient mechanisms or personnel, even lack the financial capacity, to face a task that arises at a specific time.

Concentrate On The main Aspect:

The self-employed are those workers whose hours never end, as they say: “You are self-employed 24 hours a day, 7 days a week”. This is the main reason to delegate certain responsibilities to a company that takes full charge of it and allows all efforts to be focused on the business management process.

 Expedite The Start Of A Project:

This aspect can be a significant competitive advantage. Outsourcing companies have sufficient operational, the technical, and financial capacity to start a project immediately.

This is really beneficial for a business that wants to diversify or start a new project, since, unlike the outsourcing company, it would take a freelancer even months to get the project up and running.

Disadvantages Of Outsourcing?

Outsourcing brings many benefits. But it also carries certain risks:

Choosing A Bad Company: 

One of the most important aspects when hiring a company that is in charge of one of the business services is the selection process. If the service provider company is not chosen well, it can deteriorate the company’s image. business or carry serious financial consequences.

The Company Becomes Our Competitor: 

You have to be careful about what service we outsource. It is not always convenient to give up the part of the demand that the business is not capable of assuming since, by carrying out the same activity, the subcontracted company can take advantage of the client company’s savoir-faire to become the competition.

Insufficient Cost Reduction:

When cost reduction is practically irrelevant and does not mean a great change in the economic health of the business, it is convenient to consider whether it is convenient to outsource a service.  

Jobs Are Lost:  

Human capital must always be taken into account. When the reduction of costs or the improvement of the production is not so remarkable, it is better than the department or employee of the business that is in charge of the activity that we want to outsource continues to do so.

It is vitally important to realize that if the self-employed person has a person to carry out a task, even if it is relatively more expensive, it will always be more powerful because it is done “at home”. That is to say, it is not the same that the person in charge of carrying out an activity is under our orders and we enjoy their loyalty, to being under the mandate of a third person outside the business.