It is exactly 100 years since Coca-Cola partnered with a corporation in the Philippines to outsource its bottling processes. And in the century since, the practice of outsourcing significant business operations has become commonplace.
In fact, by 2019 the global outsourcing market was estimated to be worth $92.5 billion, having grown by $15 billion in the preceding three years alone.
Over recent decades, technological advances — including the proliferation of superfast broadband, cloud computing and video conferencing — have gone a long way towards simplifying the process of finding then working with an offshore partner. Indeed, to put things in context, 70% of UK businesses have outsourced (or do outsource) services to an external partner, according to a YouGov poll.
However, anecdotal evidence would suggest that many businesses are reluctant to publicly disclose this fact. They prefer to stick to the illusions that ‘all our work is done in house’.
So, why is this the case? I believe there are two factors at play:
Firstly, the view that outsourcing, particularly tech development, results in a lower quality product or service.
Secondly, businesses want to be — or want to appear to be — fully in control at all times. Working with external partners challenges this mentality.
In reality, these criticisms do not stand up under scrutiny. They also overlook the numerous benefits that outsourcing affords to businesses, employees, customers and the economy as a whole.
New technologies have broken down barriers when outsourcing work. The Covid-19 pandemic has underlined that businesses no longer need to be under one roof to operate efficiently — tasks can be allocated, managed and completed by individuals or teams wherever they are in the world.
This means that concerns around control are misplaced. With open communication channels — including instant messaging, video calls and collaboration platforms — clients can remain as involved as they need to be. Service level agreements (SLAs), due diligence in choosing partners and robust contractual commitments should also ensure the quality of the service, while holding the external partner to account.
Importantly, greater access to better technology has also meant that outsourcing companies are able to better train their workers. Further, the workers themselves are better equipped to execute their jobs to a high standard and without delays.
Outsourcing is not about finding a firm that promises to deliver a lot for miniscule fees. It’s about specialism. There are countries in Eastern Europe, for example, that are able to develop artificial intelligence, augmented reality or big data tools that can easily match those built in the UK. Cost savings can be achieved due to the lower overheads in those countries — but make no mistake as to their expertise.
It is important that we consider the many benefits outsourcing affords to companies, particularly SMEs experiencing rapid growth.
For one, it can help address shortages within the domestic job market. In the UK, the best example is the very well documented ‘tech skills shortage’. According to reports, 71% of technology employers expect to face at least a moderate skills shortage in the coming year.
Indeed, the aforementioned YouGov research found that one of the most common reasons British companies outsource was that it is difficult to hire qualified and skilled staff to do the job internally, with 48% citing this as the main motivating factor for them outsourcing.
Elsewhere, 30% said outsourcing delivers better results than they could achieve themselves. The same number (30%) said it is cheaper. And 28% said it is more efficient. All of these point towards the customer benefitting, whether that is through a cheaper or better product.
There are further benefits to consider for a business’ workforce. Outsourcing potentially monotonous and laborious tasks, such as data entry, to a third party will instead free-up staff time for more interesting, creative jobs.
Whatever it is that motivates a business to outsource part of its operations, we should celebrate the possibilities available through this practice. Already commonplace, now is the time to dispel the negativity that still surrounds outsourcing and instead appreciate the integral role it can play in supporting the growth of small and large businesses alike.