With the growing conveniences technology brings, businesses are doing more than selling across international borders. Thanks to tech, it’s now possible to ditch the corporate headquarters if it makes operational sense. The ability to connect with individuals around the world also means hiring isn’t limited to a 50-mile radius. Talent pools, by definition, are expanding in every sense of the word.
A team may no longer be in the same time zone or classified as in-house employees at all. While outsourcing talent can go against the grain, it offers businesses several advantages. The list of benefits includes increased efficiency, access to global skill sets, and a competitive edge. Below we’ll explore how outsourcing talent can help businesses gain diverse expertise, reduce costs, and optimize operations.
1. Fill Skill Gaps
Businesses can’t always find suitable talent nearby. Sometimes it’s because there aren’t enough locals with the necessary skills for the job. Other times it’s because the company wants to expand into a different area, and no one wants to move. And there’s always the possibility that the most fitting person for the job lives in another country.
Outsourcing lets businesses add varied expertise to their team while filling in existing skill gaps. With talent shortages increasing, the ability to cast a wider talent net can make a big difference. This wider net includes recruiting from other countries where well-matched talent exists. However, when looking to hire international employees, multiple challenges can arise.
Companies will need to learn the labor laws of another country, making sure to stay compliant. Compliance may include taking the time and expense to establish a local legal entity. Luckily, an employer of record service can help businesses get over these hurdles more efficiently. Such services handle the compliance ins and outs, allowing companies to onboard international employees and contractors with fewer legal headaches.
2. Stretch the Budget
On average, U.S. businesses fork over $43.07 an hour for employees. This amount includes wages and benefits. While not every position pays average total compensation rates, these costs can become obstacles to growing businesses. For instance, small companies might need content and social media marketing to increase their reach. Yet they may lack the budget for an in-house team.
Working with consultants and freelancers on a per-project basis lets companies meet conflicting demands. Instead of paying wages and benefits, businesses can pay outsourcers per assignment. Companies won’t have as much overhead since independent contractors usually cover their own benefits and expenses. However, businesses still gain the needed expertise.
Another cost benefit of working with contractors is the ability to scale. Initially, a company might not have money to hire full-time staff. But as the business expands, the funds may be there. Former freelancers could become full-time employees, help businesses get over these hurdles more efficiently. If they don’t join the team full-time, consultants can still augment in-house abilities when project volumes exceed capacity.
3. Improve Efficiency
In most businesses, there’s a degree of separation between employees. Tanisha might be in charge of drumming up leads while Bob ensures every order gets out on time. If one of them oversteps and tries to meddle in the other’s job, efficiency will take a hit. Neither one has the day-to-day operational insights to immediately move out of their respective lanes.
Instead, each person helps the company maximize efficiency because they have specialized responsibilities. Dividing tasks this way is how companies can achieve economies of scale. When departments or workers focus on completing specific tasks, productivity and quality go up while costs go down. Outsourcing is sometimes a better way to achieve economies of scale, especially when a business lacks internal resources.
For example, say a firm is a tip-top manufacturer of lawnmowers. But providing after-market customer support isn’t something the company does well. Building up the resources to excel at this function could take years, maybe even a decade. Outsourcing those responsibilities to others with the necessary means maintains efficiency. Partnering with outside experts keeps productivity at its peak through specialized roles and streamlined tasks.
4. Optimize Long-Term Investments
With outsourcing, a business can optimize its long-term investments in infrastructure. Warehouses, manufacturing facilities, and offices come to mind. Depending on the company, fleet vehicles and inventory may also fit under the infrastructure umbrella. When businesses outsource these functions or assemble remote teams, the need for hefty long-term investments isn’t as great.
Companies remain more flexible and control costs as a result. Without as many facilities to maintain, leaders can reinvest resources in other activities. Those ventures could be conquering international markets, expanding product lines, and/or acquiring new technologies. Fewer fixed expenses might also make companies more competitive as partners. Higher compensation, including benefits and perks, could be on the table.
Outsourcing can also distribute long-term operational costs more evenly between businesses and work partners. For example, virtual assistants, PR teams, and client support reps don’t need to come into an office every day. They can work from anywhere they choose, allowing companies to maintain fewer facilities and thereby reduce the costs that come with them. In addition, outsourcing entire divisions to larger business partners streamlines costs since the latter manage their own facilities.
Outsourcing Has Its Advantages
Running a successful business is about forming partnerships. While companies must make connections with customers to gain ground, relationships with outside experts are also essential. They can add resources leaders would otherwise find difficult and cost-prohibitive to build by themselves. With strategic outsourcing, companies gain an edge in an increasingly competitive world.
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