Outsourcing has evolved into a cost-effective and straightforward method commonly used in today’s digitizing world. Developed countries, such as the United States, seek to outsource their corporate processes to emerging countries such as India (Bolger, 2017). Before we go any further, we must first understand what outsourcing entails (Bolger, 2017). Outsourcing is how businesses and organizations delegate works to a third-party vendor (Bolger, 2017). It can be used to manage any job procedure that can be handled from a location outside of the organization (Bolger, 2017). Offshore outsourcing is another name for this procedure in the modern employment field (Bolger, 2017). Such process allows the company to receive high-quality services at a reduced cost of operation (Bolger, 2017). Thus, it is important to conduct an analysis on cost efficiency of different types of outsourcing methodology.
The most significant advantage is that it enables work to be completed at a meager cost and in a lot more efficient manner. The wage structures of Western rich countries and emerging countries are vastly different (Bolger, 2017). The same work done for a high price in the west can be obtained for a considerably lower price in developing countries like India, with a difference of up to 60% (Bolger, 2017, par. 9). Work is not simply less efficient and of lower quality when outsourced (Bolger, 2017). It is done to people or organizations with a deeper understanding of the job and extensive experience in the field (Bolger, 2017). Consequently, this aspect automatically enhances the work’s quality, and it may be completed quickly and efficiently.
Furthermore, it is not necessary to spend additional funds on infrastructure development. When a job is outsourced, the partner that takes over the job makes the necessary infrastructure improvements to meet the job’s requirements (Shethna, 2021). When a corporation or organization outsources a specific work, it eliminates the need to hire skilled workers (Shethna, 2021). In addition, there will be no need to organize training programs for the same (Shethna, 2021). The work will be delegated to individuals already specialists in the area. As a result, such a tendency will also improve work efficiency and quality.
Due to the outsourcing of people from all over the world, it has a significant time-zone advantage. The time zones of one’s nation or the region where the job is outsourced can differ (Shethna, 2021). If an American country allocates work to an Indian country, the time difference is twelve hours (Shethna, 2021). One can delegate work and unwind, knowing that the task will be completed by the time one wakes up the following day (Shethna, 2021). In result, work will continue around the clock; this technique is also advantageous on a weekday off days.
Because doing everything by oneself diminishes the organization’s efficiency, as many tasks take attention, it reduces its efficiency. However, it becomes much easier when a company outsources its tasks or labor because the outsource partner shares some of the strain (Shethna, 2021). Such a factor allows for the rapid transformation of ideas into concepts and delivering products, ideas, and concepts into a competitive market (Shethna, 2021). There are often oscillations in the labor force, with fewer individuals available to work on a project, especially during the holiday and festive seasons (Shethna, 2021). As the labor force will be available around the clock to work on the assignments, subsequently outsourcing the work allows one to control this problem.
There is a lack of specialized qualified people in industrialized countries, either because there is a shortage or because they are accessible at a relatively high cost. Thus, outsourcing work to developing countries provides access to an immense pool of skilled workers that are efficient and fluent in English and are accessible for work at a low cost of labor (Lascheit, 2021). A hidden advantage of operating is that it can be outsourced once a company encounters challenges due to natural disasters, technical crises, or market volatility (Lascheit, 2021). The overseas outsource collaborators can then continue working on their projects (Lascheit, 2021). From this, one may conclude it is very helpful in getting the business back on track.
It could be done for customer care assistance, inventory control, and invoicing procedures. Many call centers outsource their work as well regarding the field of outsourcing (Lascheit, 2021). Content authoring, data entry, editorial services, typing work, picture manipulation services, transcribing, and data conversion services are outsourced work examples (Lascheit, 2021). India is the leading provider of cost-effective offshore outsourcing solutions and services, offering services in practically all outsourcing sectors (Lascheit, 2021). Apart from India, Pakistan, Russia, and Nigeria, other jurisdictions are doing well in offshore outsourcing services (Lascheit, 2021, par. 13). Consequently, summarizing the above information, main directions of outsourcing may be identified.
Even if employers do not have much work to perform right now, they are compelled to pay their staff. Payroll taxes and employee perks such as medical insurance, travel allowances, and pension plans must also be paid (Bolger, 2017). Hiring staff for inbound and outbound teams, on the other hand, can be a risky investment (Bolger, 2017). Even after an employer has spent money on their recruitment and training, they could depart at any time (Bolger, 2017). Furthermore, once an employee leaves, one will have to pay even more money to replace them (Bolger, 2017). However, when outsourcing is implied, it will only be responsible for the cost of the service package company owners select, which includes the agents’ salaries and training (Bolger, 2017). There is no need to be concerned about taxes or employee perks, as the factors mentioned above give sufficient proofs that it does not tend to be a problem. As a result, the main issues which employers come across when dealing with stuff interactions are not applicable in the case of outsourcing.
Hiring extra employees usually necessitate a larger workspace to accommodate everyone. This method could entail hiring a new office space, expanding the workplace, or constructing a commercial space from the ground up, all of which need time and money (Bolger, 2017). An employer can circumvent this issue by hiring a third-party helpdesk, such as ROI Solutions, which already has its own office space (Bolger, 2017). There is no limit to how much money one can save. According to the International Organization for Standardization (ISO), outsourcing can help organizations save 15% on average on their costs (Bolger, 2017, par. 6). However, the savings will consequently vary depending on how many businesses process the plan to outsource, and other in-house adjustments company owners want to make.
In conclusion, the analysis revealed that most of the benefits of outsourcing are related to cost-reducing practices. Moreover, the most effective methods of applying this methodology were described for the most significant financial benefit. As in any direction, there are possible problems and risks, but compared to alternative ways of hiring employees, they are proven to be insignificant. Finding and determining the exact directions as well as scaling the number of employees for outsourcing is a vital aspect of a successful company and financial success.
Bolger, I. (2017). Why outsourcing is no longer about cost-cutting. Efficio Consulting.
Lascheit, J. (2021). How does outsourcing reduce cost? (benefits of outsourcing). LinkedIn.
Shethna, J. (2021). How Does Outsourcing Reduce Cost? EDUCBA.