Outsourcing — businesses’ answer to increasing demand for efficiency
If you have ordered food delivery, you have probably noticed how convenient it is to grab food from your doorstep in your oversized T-shirt.
What you may not have noticed is that you are simply outsourcing, which means hiring an outside supplier to do your bidding — a practice that saves you much-needed social-media time and energy for you to spend elsewhere.
Similarly, as businesses seek to increase efficiency, outsourcing is increasingly becoming a popular practice. Business functions such as Web development/IT, recruiting, graphic design, marketing, legal/writing and more are commonly outsourced.
Today, businesses of all sizes, from large enterprises to early-stage start-ups, increasingly outsource their functions, and the trend is by no mean surprising. Due to the benefits of rationalising cost and getting a surge in productivity, outsourcing is a lucrative opportunity that companies should leverage to compete both locally and in offshore markets.
Because this fiercely competitive business landscape is not getting any easier, no matter how hard we complain, companies should look at outsourcing to improve competitiveness.
The first and generally the main reason companies look to outsource is cost reduction. An e-commerce website developed by a software house or a freelancer in Thailand could be 10 times cheaper than hiring a team of programmers in San Francisco.
Locally, one large enterprise I worked with has reduced its marketing costs by three times after using outsourced graphic designers to craft its marketing materials.
In addition to prettier balance sheets and more shareholder parties, cost reduction enables a company to allocate resources to do more and to put pressure on competitors.
While cost continues to be a significant driver in outsourcing, companies can also leverage other benefits of outsourcing, such as flexibility. Thanks to technology, customer trends and company directions have been changing at an unprecedented pace, making flexibility ever more important to competitiveness.
At certain times, a company’s needs in each business function could be wildly volatile. An example of an opportunistic scenario is when customers crowd to a new social-media platform (think Snapchat, but newer).
Companies can outsource talent familiar with the new platform, open up a whole new marketing channel, and eventually drive up profits.
Leveraging the know-how of outsourced talent familiar with different technological platforms can be the key in propelling business growth. In many cases, on-demand access to specialised talent increases business flexibility and can be an invaluable asset during waves of change.
Marketing your products in six weeks instead of six months is a matter of life and death for your business. Another benefit that complements flexibility, but should be separately discussed, is speed.
Speed is consistently under-rated in business, largely due to a prevailing culture where workers play safe in large corporations because a mistake can cost them their job.
But in the current landscape of change, it is not enough to just change, as you also have to change quickly. Outsourcing non-core business functions allows the company to focus on its core competencies, ignore the less important things, and outmanoeuvre its competitors.
If a job function is not related to the core competency of your business, it doesn’t make sense to invest large chunks of energy when outsourcing can save you time in purchasing equipment and training employees.
This is even more true if you are entering a new market. Let’s assume you are an online clothing store entering a non-English speaking Southeast Asian market, such as Thailand, Vietnam or Indonesia. Simply hiring local customer support instead of building a new office provides a head start in marketing and capturing customers, thus allowing you to gain market share and defensibility early on.
Looking at outsourcing in the global landscape, businesses in Thailand are in a great position to replicate their success by capitalising on ample pools of both the local and global workforce.
Although the minimum wage of workers in Thailand is amongst upper-tier countries in Southeast Asia, ranking fourth, the nation has a large pool of world-class talent in areas of art and creativity such as graphic designers, writers, video editors and much more. As globalisation continues to put pressure on local businesses, it will be interesting to see how they can leverage outsourcing — but the good news is, they are having more access to resources.
Harry is the founder and CEO at Assisti.co, a design agency that offers unlimited graphic designs for just $59 per month.