Top 5 Reasons Why Companies Outsource Talent

With the growth of a business, they often experience situations when their internal team cannot complete all the tasks or offer services essential for the organization. In such a situation, business leaders often struggle between spending time and money hiring in-house talents or looking for similar talents elsewhere. It’s where outsourcing comes into question.

Since collaborations, third-party vendors, and freelance networks emerged as the best ways and experiencing an all-time high; most businesses are outsourcing most of their tasks. Besides, consumers also expect high-quality products and services with a quick turnaround time and little room for mistakes.

Several businesses across industries, due to the demand of the customers and intense competition, are outsourcing specific components of their business operations. This adoption within the business model helped companies across industries with the essential tools and flexibility to remain effective and timely meet their target audiences’ demands and requirements.

Top Reasons Why Companies Outsource Talent

Although outsourcing recruitment is a new concept, it is growing fast. Even outsourcing companies follow the same recruiting process and get more productive. The recruiters are experts in finding new talents, which becomes possible as they conduct extensive research. Outsourcing releases pressure on companies and helps them focus on their core activities.

Enlisted are the reasons why most companies are outsourcing their work.

1: Focus On The Business Core

Your business’ core is about your products and services and the complementary components, such as your people, processes, and infrastructure.

Recent studies show that most businesses are falling short of their growth objectives. Moreover, the failure rates are as high as 80%. Organizations must focus on their company’s core in such a situation, leaving the non-core competencies to the outsourced team. A business’s core encompasses its products, services, customers, geographic areas, and distribution channels that yield the most significant return on your investment.

When you outsource your non-core activities, you help your firm improve its efficiency and productivity, as another entity performs these smaller tasks more efficiently than the firm’s in-house team. Adopting the strategy helps in faster turnaround times and increased competitiveness within the industry.

Defining your business’s core in detail helps your company take advantage of the right opportunities and prioritizes your firm to stand as a reference in your industry. Practising this facilitates assertive decision-making, goal, and team alignments, activities to outsource strategic planning for growth, face competitors and establish a sustainable business.

Optimize Cost

When you outsource some of your business’s activities, you can accomplish work at a minimal cost and with greater efficiency. Undoubtedly, the wages in Western countries differ significantly compared to the developing countries, varying by nearly 60%.

Most Western countries aim to outsource their operations to developing countries like The Philippines, as the country has a substantial cost of living and, therefore, lower wages. Industry statistics show that outsourcing to the country reduces labour costs between 70% and 90%.

Another study conducted in 2018 states that approximately 62% of companies reported between 10% and 25% when they outsourced their operations. The remaining 38% of the companies reported savings as high as 40%.

Outsourcing helps your organization reduce costs in the following areas:

  • Infrastructure: You will never need to spend extra on developing infrastructure. When you outsource work, your partner accepting the work makes necessary infrastructural changes per their requirements.
  • Training and Recruitment: When you outsource specific business operations, you do not require hiring skilled people. Besides, you do not require arranging training programs for the same. Instead, you hand the work to experienced and expert professionals delivering efficient and quality work.
  • Tap talent: Hiring specifically skilled professionals in developed countries is challenging. Either there is a shortage or the professionals impose a hefty charge. Since developing countries have numerous skilled professionals and impose less charge, businesses in developed countries prefer outsourcing their operations in these countries.
  • Risk management: Often, companies experience problems due to natural calamities, market fluctuations, and technical crises. In such a scenario, the outsourced partners continue their work on their assignments. Outsourcing is an intelligent business solution that is beneficial during tough times like financial crises, recessions, and market fluctuations when you focus on bringing your company back on track.
  • Faster Delivery: “The biggest barrier to growth is surrounding yourself with the right people” is one of the earliest lessons that almost all business owners have heard and learned. However, earlier, it was hard to practice. With a limited budget, how would you find all the professionals who would take your firm to the next level? Outsourcing is the smart option. Whether you are a startup, a small business and or a trader, some tasks require professional help, even part-time. It can be anything, from designing a new website or launching a successful marketing campaign to payroll, IT, and customer service. Whatever it might be, outsourcing is the best way to access a talented bunch of people and get your things delivered faster.

2: Outsourcing Frees Up Capital

Saving money isn’t intelligent enough for a business; it’s necessary. When you save money, you free up capital to invest elsewhere in your business. It is essential, mainly during the early stages and during crises, as you benefit from large expenditures. Outsourcing offers exponential advantages, as you need to incur small costs, and the intelligent solution frees up capital that businesses use elsewhere.

Often businesses require funding, and outsourcing some of your operations is the best solution. Investors prefer investing in companies that can invest their cash flow into revenue-generating activities. Although it seems obvious, the most successful business founders sometimes fail to understand and grasp it. 

3: Bridge the Skill Gaps to Adopt New Technology

Recent studies find that a whopping 93% of businesses indicate that they experience an IT skill gap. With rapid technological advancements, the market is experiencing a substantial shortfall between the supply of qualified IT professionals and the demand for modern IT skills, including computer engineering, programming, and software development.

Are you wondering what might bridge the gap? Well, the only answer is outsourcing. Here are the reasons why intelligent companies outsource their IT operations.

Undoubtedly, you will want all your projects to be successful. You gain a higher level of IT expertise when you outsource your IT operations. Often a company’s requirements in terms of IT support are rarely consistent every day. In such situations, most companies fail to justify having in-house IT support. The organization’s size makes it challenging to attract and retain IT professionals. However, outsourcing will solve the problem.

4: Reduces IT Costs

According to a survey, 69% of UK businesses outsource their IT operations to reduce costs. Apart from the wages, outsourcing saves a lot of money in the following ways:

  • When you do not hire dedicated IT staff, you do not spend on their training and other employee benefits.
  • You can even hire professionals on a project basis and pay them after the completion of work. Besides, your company does not require long-term collaboration, which might become cost-effective in the future.
  • Above all, you will not have to spend on office supplies and receive quality work during outsourcing.

5: Lowered Risk

An outsourcing team can monitor your IT network round-the-clock to prevent problems even before they occur. It means your business experience fewer issues, as it does not affect your productivity, especially during crises. Furthermore, outsourcing IT support ensures you have a skilled team for your organization’s IT problems whenever they occur.


Whatever your business needs are, outsourcing has clear advantages. Besides offering you and your organization instant support, it adapts to the peaks and troughs of a business. We live in a competitive world, and responsive people have the edge. Smart businesses are utilizing the power of outsourcing to improve their abilities and free up the time and resources they need to grow their business.

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