What is Outsourcing and How Does it Work

outsourcing

Many companies assign the tasks of one or several departments to another company, either temporarily or indefinitely. The most obvious example is found in the hotel sector, although it is an increasingly frequent practice in other business sectors.

What is outsourcing?

The idea of ‚Äč‚Äčoutsourcing can be summarized in the outsourcing of external labor to cover the needs of the company without the need to expand the workforce.

Outsourcing is applied in non-strategic areas of the organization but that decisively influence operations. Although often used synonymously with outsourcing, the two practices are not exactly the same.

The main difference is that the outsourcing process requires experience and specific knowledge of a certain area.

What is outsourcing for?

Organizations often turn to outsource to convert a portion of their fixed costs into variable costs.

One of the areas where this trend is growing the most is marketing. The advantages of outsourcing this department are numerous.

Due to their in-depth knowledge of the sector, marketing agencies like Video Animation are prepared to design strategies with which to improve results and achieve business objectives.

In addition to saving fixed costs, marketing outsourcing achieves significant time savings, coupled with a significant improvement in inefficiency.

Other reasons why many companies choose this type of hiring is the economy in management and the improvement of productivity since the marketing agency already has enough training.

In short, outsourcing serves to increase the efficiency of business processes with greater flexibility.

Types of outsourcing

Tasks that are delegated can span entire processes or be reduced to a single worker. The types of outsourcing are:

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Off-shoring

Off-shoring consists of contracting services located in other countries with cheaper labor. This is known as offshoring. Examples of this modality are found in the telemarketing services of some companies and in many manufactured products.

En casa

This type of outsourcing refers to the services that are provided within the company that hires them. In the hotel sector, this form of outsourcing is used for cleaning floors, catering or wellness services.

Off-site

Off-site outsourcing refers to services that are carried out at the outsourced company’s facilities. This would be the case of marketing agencies, which develop strategies and implement actions from their own facilities. The ease of being able to work remotely is a great advantage for the hiring company, which does not need to set up a specific space in its own offices.

Co-sourcing

Co-sourcing consists of sharing responsibilities and risks in the provision of services.

The current business environment allows outsourcing in many sectors. Among the most common are the following:

  • Marketing
  • Financial control
  • Sales force
  • Computer maintenance
  • Human Resources
  • Administration

In short, outsourcing is a strategic subcontracting of professionals to meet the demand in non-strategic areas.

Advantages and disadvantages of outsourcing

The main advantage of outsourcing is that the company can focus on developing its business while delegating the work of other departments.

However, before opting for the outsourcing of a department, it is convenient to assess:

  • The costs of outsourcing versus the costs of continuing with an internal department.
  • The background and experience of the company you want to work with.
  • The importance of the area we want to outsource. The marketing area can be delegated to experienced professionals to improve the company’s results.
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Let’s look at the benefits and disadvantages of outsourcing.

Advantages of outsourcing

  • Reduction of costs associated with production
  • Transformation of fixed costs into variable costs
  • Service scalability
  • Greater scope of the organization
  • Improved competitiveness
  • Greater specialization in the outsourced area
  • Organization flexibility in the face of changes or unforeseen events

How does outsourcing work?

In order to outsource any department, it is necessary to carry out a prior study of the situation of the company and the supplier that you want to hire. In this way you can assess whether it is profitable or not.

If you are thinking of outsourcing the marketing of your company, we advise you to follow these steps:

1. Analysis of the company’s situation

The first step is to analyze the strengths and weaknesses of your organization. This will help you identify the areas that are most difficult to manage or are not achieving good results.

2. Selection of services that can be outsourced

Once the problem areas have been identified, establish which activities can be delegated to an external company. Marketing outsourcing can focus only on the design of digital strategies or cover more implementation tasks, such as advertising campaigns, social media management and reporting analytical reports.

3. Bidding and contracting

Make a list of the companies that offer the marketing services you want to hire. Compare the experience, the opinions of other clients, the prices and the conditions offered by each one.

Once the company is chosen, write a document that includes your requirements in terms of obligations, restrictions and other legal aspects.

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4. Transition

At the beginning of the provision of services, there will be an adaptation phase for the external company to integrate into the philosophy of your organization. The transition should be done with caution if there is a responsible team in your company.

Outsourcing often leads to layoffs, so the process should be as calm and empathetic as possible. The ideal is to invest in marketing outsourcing without laying off staff. The external company can take on tasks that require more specialization, such as measurement and analysis of results.

5. Supervision

Outsourcing requires trust in the contracted company, but trust should not replace supervision. Follow the progress and pay attention to the quality of the service.

6. Evaluation

The evaluation phase is used to measure the results of outsourcing and should be repeated regularly.

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