Simply put, the strategy of outsourcing is the act of utilizing third parties to fill a role or a gap for your organization, whether that’s a small task or a large project. When you outsource, the third party agrees to take the project off your hands, allowing your internal team to focus on the core business.
Ready to start your outsourcing journey? Here are seven things you might want to consider before you begin.
This is part of a series of articles about Staff Augmentation.
The most popular areas of the business that organizations outsource are IT or technology positions, web design and development, digital marketing and HR. However, outsourcing is a strategy that can be used for any skills gap. Many companies outsource Legal teams, cybersecurity, and even executive functions such as the CFO or the CTO.
Especially in today’s remote working world, outsourcing is easier than ever, and companies can benefit from expertise in different geographies, time zones, or cultures. Outsourcing isn’t going anywhere any time soon. Even the outsourcing of IT services alone is expected to be worth more than $1T by 2030.
2. There are Many Different Kinds of Outsourcing
Choosing to outsource is just step one. Organizations also need to consider what kind of outsourcing they will opt for. For example, they could create a relationship with a marketing agency or outsourcing agency who will source contractors to suit their needs, and often handle some of the management, too. They could also hire freelancers directly via freelancer platforms or through word of mouth. They can bring in consultants who will usually work in-house alongside an existing team, or create a talent cloud of independent contractors, who tend to work alone and can be picked up and put down as specific projects demand their skills.
3. Outsourcing can give you access to niche expertise
Some people think about outsourcing as a way to hire blue collar workers, like scaling up manual labor to meet a peak in manufacturing demand. This is a legitimate form of outsourcing, but it’s also used as a great strategy for acquiring knowledge workers. In fact, 51% of freelancers provided knowledge work in 2022, taking on tasks such as programming, marketing, and business consultancy. As tech redundancies and layoffs happened in their thousands this year, many highly skilled professionals are looking for new ways of working, and are officially open for freelance business.
4. Outsourcing is Not the Same as Staff Augmentation
When you outsource, you need to be prepared that the third party may not work according to your own internal processes. You have little control over the hours that outsourced employees work, their location, or even the systems and tools they use. If you’re looking for added people power to work alongside your internal teams, you might prefer staff augmentation as a strategy. In contrast, if you don’t care whether the work is being done between 2-5 am in North Korea as long as it gets completed, more traditional outsourcing or freelance talent might be the right fit. Check out this blog on staff augmentation vs outsourcing for more details.
5. Outsourcing may open new compliance considerations
Especially if you’re outsourcing employees for IT projects or data-related tasks, it’s critical to consider how it might impact your own regulatory compliance. For example, if you handle healthcare data, HIPAA dictates that you fill out business associate contracts before allowing any third party to access PII. Even once you’ve started working with your third party, it’s best practice to implement regular risk assessments, KYC checks, and form exit plans for offboarding third parties from internal systems and data.
6. Outsourcing may require changes to the way you work
Many organizations think that outsourcing is the simplest answer to the need for more hands on deck. However, if you outsource work to a third party, you can lose a lot of control over the way things are done. If you outsource the creation of a learning academy for example, the LMS and other tools used might not be your preference, and you could need to return to the outsourced team every time you want to make even simple changes, employing their developers, instructional designers, UX and UI teams. If you want to retain control, consider staff augmentation vs consulting, both of which give you more oversight over the processes along the way.
7. Outsourcing needs a firm strategy in place
Whatever choice a business makes for its outsourcing needs, organizations can’t afford to walk in blind. Outsourcing is more than just hiring on demand, adding some new members to the team via staff augmentation, or hiring some remote freelancers to complete a task. Businesses need automated and digitized processes to attract the right talent, onboard them compliantly to the right systems, manage their workload and productivity, and pay them accurately and on time at the end of each month.
Hey, that’s what Fiverr Enterprise does! If you’re currently working on making outsourcing part of your workforce strategy, reach out to see how it works for yourself.
Related content: Read our guide to outsourcing employees