Outsourcing and Your BusinessOutsourcing is an established way of doing business today, allowing companies to maximize their budgets and resources — and generate better products.
Also referred to as subcontracting, outsourcing simply means acquiring a product or service rather than producing it in-house. Outsourcing is suitable for just about any industry. In
administrative field, for instance, a variety of activities can easily be farmed out to a subcontractor, including word processing, data entry, transcribing, research, contact management and event planning.
Outsourcing is extremely common practice within human resource (HR) departments. In fact, two-thirds of HR departments outsource at least one activity, according to research by Bureau of National Affairs, Inc. and Society for Human Resource Management. The top five outsourced HR activities are employee assistance/counseling, flexible spending account administration, pre-retirement counseling, outplacement services and pension/retirement plan administration.
Weighing Outsourcing Option When deciding whether outsourcing is a viable option, a company should consider all of issues involved. Should projects be kept in-house because they’re critical and employees need to know how to do them themselves? Also, does company have a sourcing plan, staff members to oversee contracts or a philosophy that supports outsourcing initiative? If it does, outsourcing may be ideal for your business. The bottom line is every business is different and companies should carefully weigh benefits of outsourcing.
Benefits of Outsourcing Many companies that choose to outsource do so because they don’t have or can’t attract people skills they need. Subcontracting gives them access to a much greater pool of resources. It also enables companies to cut cost by 10 to 30 percent, depending on industry. They can purchase services on an as-needed basis, instead of maintaining a full-time employee. This allows them to avoid paying employee-related expenses such as salaries, unemployment taxes, paid vacation and sick leave, insurance — which results in a lower overhead.
