According to Robert Handfield’s “A brief history of Outsourcing”, outsourcing was not formally used as a business strategy until the year 1989. Outsourcing is the delegation of particular tasks or projects to an outside company or consultant. These days, outsourcing is very popular and standard, especially for large corporations who have global networks of skilled people ready to assist.
In the past, it was considered not advisable for companies to outsource critical tasks or core competencies. However, now many companies are doing exactly that. In my experience, smart companies in the United States do not outsource purely to save money. They divide their workload into segments or components. They find which tasks are the least critical and outsource only those. Saving money on important tasks can get you into trouble and can backfire as a strategy if the provider company doesn’t get the job done correctly and on time as that can cost you a client.
Traditionally, companies outsourced tasks they just couldn’t handle themselves. Publishers outsourced composition, printing, and fulfillment regularly. Outsourcing support services didn’t start appearing until the 1990’s with tasks such as Human Resources, Data Processing, Mail Distribution, Programming, Security, etc.
Outsourcing is a great strategy to deal with the problem of fluctuating demand. If your business is sometimes very busy and other times very slow, you can decrease your permanent employees and hire other companies to handle your overflow. However, the real costs for outsourcing are deceptive. Many companies quote particular rates, but the real price for them to get the job done within particular time constraints are hidden as many companies do not guarantee delivery times.
Outsourcing can also reduce training time. If there are certain tasks you want to focus on, then you can train people for those. You can outsource other tasks which are not worth training your own people to do. Many small businesses engage in multi-tasking and have dozens of tasks to do. New and even old employees typically only want to do two or three of the dozens of tasks, so to get them done it is often easier to find an outside consultant.
Is it better to do everything yourself at varying levels of competency or to hire twenty consultants who are each experts in their niche field? This is a question only you can answer. But, outsourcing to freelancers, overseas BPO’s or domestic companies will give you some insight into the quality of what you are paying for.
In today’s world, outsourcing could be for various reasons. Searching the world to find the best people to give you the best results is one of the reasons for outsourcing. Cost effectiveness is another. Overflow management will continue to be a reason as well. Strategic partnerships are a standard business practice among larger companies and corporations. The problem is that for smaller companies, it is hard to find reliable service providers as the high quality providers tend to be monopolized by larger outfits. So, as a small business owner, blindly mimicking the tactics of the big boys is not an effective strategy. You need to research companies one by one and sample their work to see who is a real strategic asset for you and who is just an unreliable buffoon!