In the later 80s and early 90s was when it became popular to outsource critical business processes to combat rising labor costs and since then it has become a very good business strategy for businesses to incorporate.
Outsourcing is simply when you are using a third-party service provider to handle certain business functions to streamline business operations. This could be anything from someone to handle finances or the cleaning schedule for the organisations building. The main reason why this is good is that the costs are usually a lot less than if you were to hire in house, you do not need to worry about staff taking time off, HR issues and other aspects, you simply sign a contract with a company, and they provide the service to you.
A number one benefit to outsourcing services in businesses is that organisations can focus on the core aspects of the business, so if you work in the consulting industry you should be focusing on consulting and not that cleaning regime of the office building that you work in. Like with all businesses there are a lot of aspects to it that don’t work alongside the skills that you already have or the ones you were hired for, so this is when outsourcing is going to be beneficial because you essentially go and find companies that are good at these things and allow them to do it for you.
Another benefit to outsourcing is that you have a lot more control over the cash flow that is going out of the company, if you were to pay someone full time to do a certain role then you cannot change that are make any cuts unless you are to fire that certain person. When hiring a third-party service like a facility management company, you can have a lot more flexibility on the amount of money that is spent on these services.
You also don’t need to train anyone when you outsource services. When companies hire new employees there is a period in which organisations have to dedicate time and effort to mould an individual into their working environment to get the most potential out of them, this can be seen as a waste of time and efforts from senior management when they could just hire professionals in the industry that can just come in, do the job required of them and then leave.
Outsourcing is something that has been used widely for many years in many different types and sizes of businesses and will continue to do so because of the insane benefits that can come from it.