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Outsourcing - The New Industrial Revolution

Although often confused with offshoring, Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally.

It often involves the contracting of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center support). The term "outsourcing" came from "outside resourcing" and dates back to at least 1981. Outsourcing sometimes involves transferring employees and assets from one firm to another.

Outsourcing is also the practice of handing over control of public services to private enterprises.

Today we live in the era of esteem digitalization and we are witnessing a lot of processes being carried out online. All of those tasks, both minor or major can be outsourced.

The modern outsourcing first started with the relocation of the big corporate call centers to countries like India and Bangladesh where the cost of labor is between $0.30 to $0.50 per work hour. But after a few years this model was up-scaled and today we see that more and more companies are outsourcing various more comprehensive projects. In 2017 Apple pointed out that the contract manufacturing that their former parts and components supplier Xia Xhimin Co. was sought after as outsourcing of the manufacturing process itself.

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Inspired by this notice of the Big Tech Company we started snooping around and compiling a research on what else companies have been outsourcing and why. We figured that there must be a bigger playground in this segment than the previously mentioned outsourced customer support and call centers.

So first let’s start by the why. Companies primarily outsource to reduce certain costs, which may include peripheral or "non-core" business expenses, high taxes, high energy costs, excessive government regulation or mandates, and production or labor costs. The incentive to outsource may be greater for U.S. companies due to unusually high corporate taxes and mandated benefits like social security, Medicare, and safety protection (OSHA regulations). At the same time, it appears U.S. companies do not outsource to reduce executive or managerial costs. For instance, executive pay in the United States in 2007 was more than 400 times more than average workers—a gap 20 times bigger than it was in 1965.

Other reasons include:

  • Reducing and controlling operating costs.
  • Improving company focus.
  • Gaining access to world-class capabilities.
  • Freeing internal resources for other purposes.
  • Streamlining or increasing efficiency for time-consuming functions.
  • Maximizing use of external resources.

Now when we have a better picture on why companies make a decision to outsource, now let’s determine what they have been outsourcing.

One of the biggest names in the Big Pharma field has been successfully outsourcing manufacturing for years. By following the trail that GSK has left on certain accounts we discovered a manufacturing plant in Ferrara, Italy that produces more than two thirds of the liquid medications that are available in Europe, Some parts of Africa and the middle east. That company is a contract filling factory that works as a contract manufacturing facility that works kinda as the biggest most corporate freelancer.

When we continued to follow the trail of the business model of that plant we realized that all IT tech companies are doing the exact same thing and they are shifting their manufacturing capital towards contract manufacturing plants in China, Korea and Taiwan.

Okay, so we now know that Big Corporations are playing this game, but what can the smaller companies do to enter this segment and how this can be beneficial to them?

First of all, we should be very well aware that the modern day entrepreneur spends more than 14 hours a day on work related projects, just because the circumstances today are such where, due to the many channels and sources there is a lot more to do in order to build a significant presence than ever before.

It is essential to appreciate and acknowledge that no single individual can handle all these different tasks.

So, let's start by taking a look at some of the valid and compelling advantages businesses experience from outsourcing their tasks.

Startups, small companies and even mid-sized businesses with up to 50 employees need to outsource so they can pay attention to the core business activities. Outsourcing tasks to outside work power canclear the schedule of the employees, managers, and free owners so they can focus their attention on more income generating activities.

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Every day-opportunities for business growth and a desire to develop your company’s operations exist, but resources to make all these happen are lacking. Outsourcing will create some free time for numerous employees, and this could be everything you need to take full advantage of the daily opportunities.

Outsourcing also permits access to skilled talent. Even more, outsource businesses can offer, latest technology, innovative approaches, and creative, cutting-edge solutions that otherwise are not available. On top of that, a skilled firm or contractor can generally execute tasks more cheaply compared to hiring a full-time employee. This implies that the costs of employing, coaching, and maintaining workers are eliminated and so are benefits and tasks.

That being said, below are numerous tasks you should aim to outsource as you grow your business as we all know that the globalism and the current trends are as such where you can’t really develop a brand nationally without any recognition from the rest of the world.

Here are some ideas of stuff that we recommend being outsourced.

FYI We also perform networking assistance as part of our services, and for exclusively for all IBA members we are willing to offer our corporate outsourcing assistance services free of charge. We are keen on helping all companies or individuals that are eager to get a taste of the outsourcing experience making sure they get connected to a database of pre-filtered and dependable individuals and companies.

1. Outsource Customer Service and Lead Generation.

2. Outsource Bookkeeping and Accounting.

Bookkeeping and Accounting are just like your morning jog; no one really wants to take his/her time out to do it but disregarding it may result in serious complication after a specified period of time.

3. Outsource Social Media Marketing.

Social media platforms are no longer restricted to personal communication. Nowadays, lots of companies are using social media platforms such as LinkedIn, Twitter, Facebook, Instagram, and Even Snapchat for lead generation.

As an entrepreneur, you can easily outsource this task to one of the social media marketing agencies. They’ll have a team of well-skilled professionals set aside, and their work is to grow and monitor your followers.

4. Outsource Tax Filing and Tax Preparation.

5. Outsource Payroll Processing.

6. Outsourcing Your Creative Work.

Most entrepreneurs think that they can perform their own design tasks. Well, it’s true they can, but very few of them can do it well, and that’s why you are advised to leave this to the experts.

Websites such as Upwork connect business owners with some of the best designers around the globe. It’s pretty affordable, and you’ll get a huge number of freelancers to choose from. In case you’re on a tight budget, sites such as Fiverr can help you out.

7. Outsource Event Management.

We are sure that you’ve seen the article on the IBA blog that featured the 5 key points behind every plan to host the perfect event. A trustworthy event management firm can take away this whole burden as they have a good connection with food caterers, sound providers, technicians, and other vendors.

8. Outsource Everything You Do Not Enjoy.

There are various tasks that you’ll simply hate doing, like updating the calendar, scheduling, or perhaps it’s writing blogs and articles. I am also confident that you enjoy performing specific activities, and that’s what you should focus on. It’s better if you just outsource such tasks to experts who are good at it.

9. Outsource Customer Phone Support.

10. Outsource Web Design.

In today’s modern IT industry, we see more and more even bigger scale companies as well as small almost freelance projects being outsourced to remote workforce, and the main reason for doing that is because the project itself wont overwhelm the entrepreneur granting more flexibility and time for him to be networking and looking for other projects.

11. Outsource Human Resources.

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12. Outsource Engineering.

Yes, this is present too, mostly because the final turnover package is a CAD or a string of code that needs to be copied to the machine for its execution making this one of the hottest segments for outsourcing in the few years to come.

13. Outsource Research and Development.

R&D labs on remote locations are much more cheap to run and the results they can provide are nearly the same of having the same work done in house.

14. Outsource Data Entry.

Routine data entry tasks (such as order processing, cataloging, scanning, and indexing) are perfectly well-suited for outsourcing. A cost-conscious company will easily hire an outsourced team to execute just about every data entry task conceivable and also get the job well done with adequate accuracy.

15. Outsource Computer Programming.

Computer programming is typically outsourced for similar reasons as web design. This can be done even from a company that is not necessarily in this industry and for projects of their personal interest.

16. Outsource Website Optimization.

17. Outsource Skills You Do Not Have.

Most entrepreneurs start their companies based on the primary skills they possess. Bill Gates started Microsoft because he had a passion for IT.

Most entrepreneurs face such issues, but the only problem is, some of them might force themselves into trying out things they do not have an idea about. In such circumstances, it’s intelligent to outsource projects in need of skills you do not have.

So yeah instead of learning everything and doing everything yourself, just outsource!

18. Outsource Your Digital Marketing Campaigns.

Like stated before, when you are running your firm, time is of the essence and marketing or promoting your brand might take up plenty of that time.

Outsourcing your digital marketing campaigns to a digital marketing agency can bring about immense benefits to your business.

19. Outsource Video Editing.

The market of qualified video editors has been growing rapidly. Countries like Romania, Bulgaria and Macedonia are becoming very well known for the quality of the work it’s video processing companies are doing. Having companies that worked on many Hollywood blockbusters, award winning movies is certainly one of the reasons why you should consider shifting your video editing needs to such locations

20. Outsource Email Management, Calendar Management, Booking Appointments’ and other personal and business needs to personal or virtual assistants

21. Outsource Manufacturing and Production.

This is something we covered in the introduction segment of the article. The trend of outsourcing manufacturing functions to companies in nations such as China makes significant sense.

22. Outsource Inbound Marketing.

One thing when it comes to being a marketing expert is every single person thinks they can also perform your tasks. On the exterior, marketing practices look so easy, though, in various respects, it is.

23. Outsource Branding.

Building a well recognized international brand takes a lot of research, time and effort. Instead of being swamped with stuff regarding what your potential clients will like to have in front of them, outsource the branding and spend that time in networking.

24. Outsource Training.

Our Final thoughts on this matter are that if you are new to outsourcing and looking to make the most of this, don’t do the dull thing and go for platforms like fiver, upwork, freelancer etc. on your own. You’ll get over excited from all those cost saving offers you’ll receive like $0.10 an hour for booking and accounting, but we assure you that even on a small scale you’ll end up with no work getting done, you’ll start getting impatient and start doing the work on your own. It’s always very important to do your research and onboard the best person for that position.

If you don’t want to wait for the next month’s publication on the key features that you should look for in your remote workforce, please get in touch with us and we’ll be happy to share our insights.

Author: Tomislav Micevski, CEO на IT Innovations.  

Reference: https://ibaconnect.com/en/blog/outsourcing-the-new-industrial-revolution