We have all heard the buzz about outsourcing and outstaffing. This article will help you decide which business model is best for your company in 2018.”
Outsourcing or outstaffing are both business models in which companies rely on others to perform work for them. Both are thought to increase efficiency, generate significant profits, and allow businesses to focus on what they do best. However, outsourcing is sometimes seen as a more modern approach when compared to outstaffing. At one point, outstaffing was the more popular approach. Outsourcing is a strategy that companies have been using since the 1970s. In comparison, outstaffing has been used for many years.
Outsourcing and outstaffing are both used by professional service firms to meet their client’s needs. Since 2010, outsourcing has become more popular because of the economic downturn and an increase in competition from larger providers. Outsourcing can be used to fill open positions or to make improvements in quality by bringing in new employees. Outsourcing companies are typically larger companies, while outstaffing is more popular within smaller businesses.
Outsourcing is an arrangement where a company entrusts its operations to another firm, which is often referred to as an outsourcing partner. The other party then performs the work that the company would normally do itself. This strategy provides additional revenue, cost savings, and flexibility for the company that chooses to outsource its services.
Outsourcing, traditionally, was the more popular option, but today companies are realizing that outstaffing can provide significant benefits.
Outsourcing in Business
Outsourcing is expensive.
It is estimated that the total outsourcing expense for a single year ranges from 1 to 3 percent of a company’s annual turnover. One of the main reasons for this is the need to pay an intermediary company to process applications for these positions. The company expends a lot of time and money in this task and it’s not always the ideal approach. Outsourcing is also very costly in terms of logistics and transportation costs.
Outsourcing saves time and money, but it is no good for you if there is no turnaround.
While outsourcing gives you unlimited access to potential candidates, it doesn’t mean that these options actually meet your needs. It can be very challenging to find the right talent for your organization. It is often the case that companies end up rejecting candidates because they do not find them to be suitable.
Outsourcing is not profitable for small businesses.
The main reason small businesses choose outsourcing over outstaffing is financial efficiency. While outsourcing might be the right choice for large organizations, it does not always work well for smaller companies. Smaller companies need to focus on maintaining its identity and positioning itself as a leader in the industry. Moreover, smaller companies cannot always benefit from outsourcing projects because of their limited resources.
Outsourcing does not require maintenance, while outstaffing requires maintenance.
Once you outsource your work, it does not require any maintenance. The outsourcing company takes care of all organizational, administrative, and logistical issues. However, with outstaffing, you will have to invest your time and effort in the selection of candidates and the training process.
Due to these reasons, outstaffing is becoming increasingly popular today among businesses that want to increase their productivity while saving money.
Benefits of Outstaffing
- Faster times to market: Outsourced customer support means that the companies customer care representatives have immediate access to information that can help them provide their customers with an overall better experience with your product or service.
- Increased flexibility in hiring and firing: The business can add or subtract employees based on the season or the amount of customer support being received. Outsourcing helps to ensure that the company will have a customer service department available whenever they’re needed.
- Lower cost of operations: When outsourced support is provided by another company, then the company that created that product or service does not need to pay the salaries of employees who are performing this support. While this may initially sound like it’s lowering the efficiency of their business, outsourcing allows for increased flexibility in hiring and firing. And since employees who are performing the outsourced work do not require a salary, there is no need to hire anyone at all; The business no longer has employees who need to be paid.
- The business can focus on executing its strategy: When the customer support is being outsourced to an agency, the company does not have to worry about them calling in sick or calling in for vacation. This allows them to focus completely on increasing the sales of their product or service without having to worry about how they are going to get customer support handled.
- Greater increase in efficiency: When your business out staffs, that means that more people are on hand all of the time to answer your customer service phone calls and emails.