Why Do Businesses Use Outsourcing?

Posted on 3:49pm Tuesday 9th May 2023

Outsourcing is a great way for businesses to save money and time. Companies can hire freelancers for a fraction of the cost and not have to worry about management, benefits, or training.

It also gives companies access to skills that they might not have on their own team. This flexibility allows companies to quickly scale up or down depending on their needs.

Not only do large businesses outsource tasks, but small businesses, home businesses and startups too!

When you're running a home-based business, it can be tough to keep on top of everything. From managing your finances and keeping on top of paperwork, to marketing your business and maintaining a strong online presence - there's a lot to do.

Outsourcing some of these tasks as your business grows, will free up your time so that you can focus on the parts of your business that you're good at and that you enjoy.

In this article we will explore:

Why do businesses use outsourcing?
Pros and cons of outsourcing
What tasks can you outsource? (11 examples)
The final word on why businesses use outsourcing (and yours should too)

By the end of the article, you will understand why outsourcing tasks can help your business growth accelerate and the types of things businesses frequently outsource.

Why do businesses use outsourcing

Why do businesses use outsourcing?

The term outsourcing is often used to describe the act of using a third-party organisation or company to perform certain business functions. A business will hire a company or individual freelancer to take over some of the work that the business currently does.

Outsourcing can be a cost-effective way for companies to save money by moving tasks that are not core to their business to other organisations that specialise in those tasks.

Companies outsource for various reasons, but the most common reason is to save money. It is often cheaper than hiring someone internally. They can also outsource to get expertise in a certain area that they do not have in-house.

The benefits of outsourcing are plentiful. Businesses can focus on their core competencies while outsourcing tasks that they don't have the expertise for, such as customer service, software development, marketing, finance etc. Outsourcing helps businesses be more competitive by freeing up time and resources to invest in other aspects of the business.

Outsourcing can be a great way to free up time and resources, while still maintaining control over key aspects of a business.

Pros and cons of outsourcing

Let’s explore the pros and cons of why businesses use outsourcing in more detail.

Pros of outsourcing

Outsourcing can be an effective way to reduce costs, increase efficiency, and improve quality.

The pros of outsourcing are:

It can be less costly than hiring employees
It can be more efficient than hiring employees
It provides an easy way to find qualified employees
It can lead to improved quality
It may allow the company to focus on its core competencies
It can save the company money
It can save the company time

One of the main benefits of outsourcing is it opens up a business to a pool of talent globally, especially if the work to be undertaken can be completed remotely. No longer are you restricted to only hiring from the pool of talent within your local area. Suddenly you are able to hire an individual or team from anywhere in the world, meaning you can hire the best of the best to complete the specific task at hand.

Hiring actual employees into your company comes with a lot of strings. You will be subject to certain employment laws and contracts that may not be necessary for a one-off job. It means you are committed to your staff member, unlike the flexibility that freelancers and outsourcing tasks offers.

Hiring staff also takes time. The recruitment process can be long and drawn out, when there may be many freelancers available immediately. There are lots of freelancer platforms online and directories so businesses can find who they need with ease. If it doesn’t work out, there is no hassle of long drawn-out disciplinary proceedings to legally fire an in-house staff member, but a business can choose to stop working with a freelancer and choose someone more suitable.

Saving money and increasing revenues are the main benefits of outsourcing business tasks. Sometimes a business will have to spend money to make money. This is especially true for home businesses and small businesses that don’t have large teams and are trying to handle everything solo. One of the disadvantages of running a home business is trying to do everything yourself and handing these tasks over to reliable freelancers can be a massive help. Outsourcing the right tasks such as accounting/tax and marketing could help to reduce taxes, for example, as well as increase profits and generate more sales.

Cons of outsourcing

The benefits of outsourcing are many, but there are drawbacks. The decision on whether to outsource or not can be a difficult one. One must weigh the pros and cons and decide what is best for the company.

Some of the disadvantages of outsourcing include:

Lack of control over projects and timelines. Outsourcing companies have their own deadlines that may not be in line with yours. This can lead to missed deadlines, delayed projects, and other problems.

Lack of control over quality. When you outsource your work, you are entrusting someone else to do your job for you and this can lead to mistakes and errors in the final product. They may not have as high a standard as you.

Loss of intellectual property rights when handing over work to another entity that may not be trustworthy or reliable enough with your information or data.

Communication difficulties. When you outsource your work, it's difficult to communicate with those who are doing the work for you because they are not always in close proximity or even in the same time zone as you are. This leads to problems that could be avoided if they were just on-site with you at all times.

It can be more expensive than hiring in-house. This is true if you have a large project that could take years. Freelancers are often hired short term so their rates are usually higher than hiring an employee. Consider what is best for your business as long-term use of freelancers on a full-time business could be costly.

This is why it is important to do your research and outsource to reputable or recommended individuals and companies.

What tasks can you outsource? (11 examples)

The amount of tasks that can be outsourced is vast. In fact, you could probably outsource every part of your business if you wanted to!

I’m not going to say you should outsource absolutely everything in your business. No, I think there’s a time and a place when outsourcing becomes beneficial, or else it ends up being a massive expense..!

It’s about working out which tasks will benefit you the most by being outsourced. Perhaps there are admin tasks that take up too much of your time so you can’t focus on getting more leads for your business. In this situation, it would be best to hire a virtual assistant to take care of your admin tasks for you if it’s more profitable for you to focus on generating new leads.

Perhaps you are not competent in doing your own bookkeeping, accounts and filling in tax forms. You could even be missing out on tax breaks you are entitled to or allowable expenses. Outsourcing this task to an accountant should pay for itself!

So what other tasks can you outsource? Here are lots of ideas to get you started.

1) Social Media Management (SMM)

If you're not a fan of social media, or you don't have the time to keep up with it, then why not outsource your social media management? There are plenty of people and companies out there who can help you to create and post content, interact with your followers, and grow your social media following.

2) Bookkeeping, accounts and tax

You may believe you can handle this yourself. If you have a small business with very few expenses, then it may be straightforward for you to take care of things. Keeping on top of your finances is essential for any business - but it's not always something that comes naturally to everyone. If you find bookkeeping and accounts a struggle, then it could be worth outsourcing this task to someone who knows what they're doing.

It’s so important that your business does its taxes properly and effectively. You may know how to fill in a tax form, but do you know all the different things you can claim back as business expenses? It may help your business if you outsource to a financial expert to handle these jobs. Find an account that knows small business finance. Often people say their accountants pay for themselves in the savings they make for their businesses!

3) Website maintenance and IT

If you have a website for your home-based business, then you'll need to make sure that it's kept up-to-date. This can include anything from adding new content and blog posts, to ensuring that your plugins and software are all up-to-date. IT support is also essential. If you heavily rely on a computer to run your business then you won’t be able to make any money should it fail to work properly! IT consulting for SMEs puts you in a position to focus on your business.

4) Customer service

If you have customers or clients, then you'll need to provide them with excellent customer service. This could include dealing with enquiries, handling complaints, or simply providing support. You could use call centre services to handle your incoming calls.

5) Marketing

Marketing is vital for any business - but it's not always easy to do yourself. There are many cheap ways to market your small business, but if you're not sure where to start, or you don't have the time to dedicate to marketing, then outsourcing this task could be a good idea.

6) Data entry

If you have a lot of data that needs to be entered into your system, then it can be time-consuming and frustrating. outsourcing this task to someone else can take the pressure off, and ensure that it's done quickly and efficiently.

7) Virtual Assistant

A virtual assistant is a broad term for someone who can help with all kinds of tasks, from customer service and social media management to data entry and bookkeeping. If you need some extra help to keep on top of everything, then a virtual assistant could be the perfect solution.

If you run a business that often gets calls and emails from existing and potential clients, then it’s definitely something to think about. A virtual assistant can be someone that answers your calls and manages your inbox for you.

8) Search Engine Marketing (SEM)

While you could try and outsource all your marketing, there are actually a lot of different types of marketing and it could be beneficial to work out which part you most struggle with, or which part would be most profitable if successful. Search Engine Marketing, also known as SEM is probably the most complicated part of a marketing strategy, which is why it benefits you to get some help. It’s about getting search engine traffic via paid ads, so it’s vital these ads are done correctly otherwise you could waste a lot of money.

Trust the experts, and you’ll soon have a website that ranks highly in Google searches and brings in a lot of traffic. Many parts of marketing & advertising are simple. So, why pay an agency to do them for you? Save money, and get help for something complicated like SEM.

9) Conversion Rate Optimization (CRO)

Another thing to outsource if you want to grow your business is Conversion Rate Optimization. You may have generated leads to your website through marketing and SEM, but now you need to convert them into paying customers. This is where conversion optimization comes into play.

Conversion Rate Optimization is a process that helps improve the conversion rate of a website. It starts with understanding the customer journey and then optimising for each stage of the process. This includes things like analysing what content is being viewed, how long visitors stay on a page and what they click on. This data can help marketers and developers to make changes to the website to better suit the audience's needs.

Outsourcing conversion rate optimization is a better choice for most companies. There are many reasons why you should outsource CRO. One of the main reasons is that it takes time and effort to find and hire the right professionals for CRO. It also takes time to train them, which can be a costly process for most companies.

Another reason why you should outsource CRO is because of the specialisation required to be a good conversion rate optimization professional. If you don't have the resources to hire someone with deep knowledge in this field, then it's best to outsource this work as well.

10) Design

The importance of design in business should not be understated. Design encompasses so many things when it comes to a business from software design to website design to marketing design and even product design.

Developing software is so complicated and requires loads of hands on deck. If you were to do it yourself, you’d need to hire a full team, which would be so expensive. Most business owners don’t have the skills required to develop the software needed for their websites, apps or products so outsourcing software development to those with the correct knowledge is a must.

Graphic design is also important for the branding of a business from website graphics to a logo and even marketing materials. Even a home business needs a proper logo for its website. The only way to achieve this is with a high-quality graphic design.

Website design is important too. It’s often the first impression of a business, so it needs to be designed well from the look to the layout and user experience.

Luckily, every element of design that is needed for a business can be outsourced to a designer who is highly skilled in a specific area.

11) Copywriting

Copywriting is a time-consuming process. As a business owner, you have to spend hours and hours on the content you are publishing. And if you have a website, then your copywriting has to be unique and engaging every time. However, if you outsource your copywriting to an agency, then they will take care of this for you.

You can hire writers specifically to suit your business needs. For example, you can hire blog writing services in the UK if it’s your business blog that needs some attention. Writing blog posts can take a lot of time and effort from researching to creative writing, proofreading and editing. If this time can be better spent elsewhere in your business, then hiring copywriters that specialise in blog posts makes business sense.

Or perhaps you sell goods online and need eye-catching copy for your product descriptions to increase sales. There will be writers available that specialise in product copy to convert.

There will be different types of content you need depending on your business type. Types of copywriting you can outsource include:

Blog posts
Website content
Email marketing and/or newsletter content
Social media content
Public relations copywriting
SEO copywriting
Product descriptions
Technical content writing

Outsourcing your copywriting to an agency can help you save money on hiring expensive writers or hiring in-house writers who are not experienced enough. It can bring a fresh perspective and different point of view. It also frees up more time for other important tasks in your day-to-day life that need your attention.

The final word on why businesses use outsourcing (and yours should too)

If you’ve ever read advice on how to limit your business expenses, then you’ve no doubt already heard about outsourcing before reading this article. It’s an idea that’s very useful for home businesses, as you pay companies to handle specific tasks. There are lots of services that can be outsourced for small businesses.

The alternative to this is hiring your own employees, which can be both impractical and too costly for most small businesses. Therefore, outsourcing is a popular practice for many companies, of all sizes, but it does come with its own set of pros and cons.

Outsourcing some of the tasks associated with running a home-based business can be a great way to free up your time and energy. It can also help to reduce stress levels and allow you to focus on the parts of your business that you're good at.

The advantages of outsourcing are that it can provide the company with a wider range of skill sets, more efficient workflows, and lower expenses. Essentially, it can help your business grow.

However, there are also disadvantages to outsourcing such as loss of control over the process, difficulty in communication, and lack of knowledge about the company's processes.

If you're not sure where to start, then take a look at some of the tasks that you typically spend your time on, and see if there's anything that could be outsourced. The best thing to do is have a look at business processes and figure out whether or not you can do them yourself, and do them well. If you can’t perform tasks to a high standard - without other areas of your business suffering - then it’s time to outsource! You might be surprised at how much easier it can make running your business.