It may seem hard to believe but, according to Robert Handfield’s “A brief History of Outsourcing”, outsourcing was not formally identified as a business strategy until 1989. Outsourcing is the delegation of a specific project or task to an outside consultant or company and has become a very popular strategy for companies today.
Not that long ago, it was not advisable for companies to outsource when the task was considered critical or fundamental to the operation of the company and the supply of the skills were low or scarce. You would also tend not to outsource your core competencies or those functions that get close to your customers. Managers often contracted with service companies to deliver services such as: human resources, accounting, data procession or maintenance. Before a company would consider outsourcing a part of their operations they would be advised to understand the level of “criticality” of the task and the available supply of the skills.
However the current stage in the evolution of outsourcing has changed. The focus today is on developing strategic partnerships and decisions of whether to outsource or not are based on who can deliver the most effective results on a specific function rather than analyzing whether the function is core to the business. Indeed, in keeping up with these changes, it is now easier than ever to hire external consultants or experts to help you get the job done. Many talent marketplaces have developed where you can now more easily find the specific skills required to complete the function at hand.
What are the advantages for companies to outsource?
Today outsourcing is not only about reducing costs by reducing the number of permanent employees, there are other benefits and the decision to outsource is often considered a strategic move.
Outsourcing can give companies more flexibility in their recruiting policy. Many industries have fluctuating demands, and meeting these demands can be difficult. On the other hand, failing to meet the demand may be very costly for companies. By hiring contractors and consultants, the company is able to cope with changing seasonal and cyclical demands, while keeping labour costs low, predictable and efficient.
Reduces Requirements for Training
Small or medium companies can find it difficult to train and integrate new hires. Training employees can be extremely time consuming and risky especially when the hire does not pan out. In addition, there is an adjustment time, or learning curve, during which the employer will not be at full potential until he/she is fully integrated. By hiring contractors, the company can save time and effort on training, and can see expedited returns on their investment. These contractors come in and hit the ground running.
Gets you the best expert
Hiring a contractor is a great strategy for a company who needs very specific knowledge for a specific project. Your company might not have the internal resources or need to keep the best expert on a full time basis. Hiring freelancers allows you to have the best expertise and experience and tap into best practices. Another bonus is that these skills can be transferred to your permanent staff!
Accelerates your project
Having a designated team or individual focused on a specific task allows the project to be completed faster without distractions reducing the time-to-market sometimes, by significant amount of time.
So with the many advantages of outsourcing it is no wonder that companies today more than ever are outsourcing with talented freelancers.
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