Reasons of outsourching

7 Solid Reasons Why Companies Are Outsourcing Today

Reasons of outsourching

Outsourcing is the practice of engaging a company or individual outside your own company for looking after a specific non-core business process. The sole purpose is to reduce costs, improve productivity, and deliver better quality services. By adopting business process outsourcing, companies can focus better on their sales leading to greater revenue.

With innumerable benefits involved, the outsourcing industry is expected to expand by $98bn by 2024!
So, read along to find out why large corporations are increasing their budgets on outsourcing services like Backoffice and/or IT.

Perks of Outsourcing –

The following reasons are mostly the ‘why’s‘ explaining the motives behind adopting this approach:

  1. Cost-effectiveness
  2. Improved quality of service
  3. Higher productivity
  4. Efficiency

BPO can be beneficial for businesses of all scales, both SMEs and large corporations; however, there are certain benefits that reveal more than just numbers.

Intangible advantages of outsourcing:

  • Increasing efficiency and productivity by outsourcing work to external providers
  • Accessing specialized skill sets beyond the walls within your workspace
  • Maximizing your company’s potential by allowing more time to focus on more important aspects of your business
  • Increasing your company’s productivity by freeing up resources that could be used elsewhere

More elaborate explanation to understand the costs and benefits associated in this business strategy.

1. Lower Business Overheads

Outsourching saves money

Cost reduction is one of the central reasons behind companies choosing to outsource their work; as a result, organizations are able to save BIG, primarily in –

Salaries or Wages

The more qualification, skill, experience an employee has, the higher will be their wage rate.

Full-time employees are entitled to fixed costs, but outsourcing allows you to hire flexible workforce, depending on the workload.

When you are outsourcing your work, there are numerous skilled workers who will provide you with desirable output at lesser costs.

For example, an Asian’s per capita income is a lot lesser compared to that of an American’s per capita; therefore, it’s better to consider outsourcing if you can get a job done for $5 instead of $50?

Recruitment Cost

Finding and recruiting new employees could get tiring; moreover, experienced and qualified candidates aren’t easy to come across all the time.

A better alternative is to hire a freelancer who’s had similar work experience and is already familiar with the task.

Training Cost

Technology and agile work processes are rapidly progressing, which is why training employees has become quite mandatory for corporations.

However, there are expenses involved while hiring a trainer, so why not hire somebody who’s already trained but not a full-time employee?

Expanding Offices

Office expansion is quite expensive and hard-hitting for small businesses; therefore, often incurring massive capital expenses.

BPO recruits can save you the time, cost and trouble often associated with expanding or relocating your office space.

Purchasing Equipment

Most businesses require necessary purchases in terms of equipment, costing you heavily due to regular maintenance or upkeep.

When choosing an offshore backoffice or IT/technical support, make sure that you are fully aware of their infrastructure.

2. Access to Diverse Talent Pool

Most small and medium sized companies are oftentimes incapable of affording in-house teams due to limited budget, and while outsourcing, they gain access to a wide range of skilled and talented experts across numerous verticals.

3. Focus On Core Processes

Companies get carried away with tedious or non-core activities. Such tasks are secondary; as a result, businesses have very little time to execute their major goals mostly involving sales.

Companies are outsourcing their secondary or tertiary work processes to agencies or individuals, thereby, enabling the in-house teams to perform better under comparatively lesser work pressure.

4. Customer Support 24/7

24/7 work

Customers are the lifeblood of companies, and therefore, you must be ready to respond to their inquiries or address to their issues really fast.

Having 24/7 customer support will retain more customers as they will find your brand more dependable.

A customer-centric approach will always be useful in terms of nurturing customer loyalty, reported by 77% American customers.

5. Tax Break

Another major reason corporations outsource their work is due to the tax breaks involved in this process.

Companies can also save large budgets on taxes due to hiring remote teams from other countries, they can cut down on taxes according to Federal Law.

6. Remain Tech-Savvy

keep running your wheels

Technology is transforming rapidly; as a result, you constantly need to train and up-skill to learn to leverage tech.

Meanwhile, the cost of purchasing new hardware and software is more expensive now following the recent pandemic.

There’s one way you can remain updated without worrying about updates, because your outsourced agencies or partners are staying ahead of the competition to deliver you quality work consistently.

You have more time to deal with how to grow your business by adopting the right technology.

Growth of Outsourcing in a Globalized World –

Outsourcing work is becoming a norm today as term being used interchangeably; however, the concept has gained popularity since the 80s, and during 2000s, it finally took off.

In 2016, companies outsourced more work than ever before, and this trend has now become an essential strategy among various industries.

The global outsourced customer experience market was estimated to be worth $75.1 billion in 2017, and $82.5 billion by 2022.

However, the overall effects are positive because companies can scale their operations by minimizing their expenses.

Pros & Cons Of Outsourcing –

Here are a Few Pros of Outsourcing:

  1. Fundamentally your costs are reduced
  2. Faster completion of projects with a greater success rate
  3. You can expand or contract your team efficiently
  4. Increase productivity or flexibility at work
  5. Focus on business development or growth

Despite many advantages, outsourcing comes with certain drawbacks, such as:

  1. When you are outsourcing work there could be differences in time, culture, and language
  2. You will have less control over the quality of work
  3. Confidentiality of information
  4. Issues related to the turnaround of timely completion
  5. Slow response times with sluggish issue resolution

Outsourcing possesses advantages and drawbacks. Understanding these can make you aware of whether you should outsource or not.


The outsourcing industry has been growing rapidly over the past few years, offering opportunities for businesses to save time and money. The market has seen an increase in the number of outsourcing options available in the market today; hence, it’s important for companies to be mindful of how they are choosing to outsource their work. They need to be sure that they are getting quality services and not just cheap labor.

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