As companies are constantly seeking strategies to stay competitive and efficient, one such strategy that has gained significant traction is outsourcing. This article will explore various outsourcing examples, identify the best example of outsourcing, and provide a comprehensive understanding of the benefits of outsourcing.
What is Outsourcing?
Outsourcing involves delegating certain business processes or services to external agencies or third parties. This strategy allows companies to focus on their core competencies while benefiting from the expertise and efficiencies of the outsourced service providers.
Outsourcing Examples
There are numerous examples of outsourcing across various industries. Here are a few:
Customer Service: Many companies outsource their customer service operations to specialized firms. These firms have the necessary infrastructure and trained personnel to handle customer queries and complaints effectively.
IT Services: IT outsourcing is common among businesses of all sizes. Companies can outsource a range of services from software development to network maintenance.
Manufacturing: Many companies, especially in the electronics and clothing industries, outsource their manufacturing processes to countries where labor costs are lower.
Human Resources: HR functions such as payroll, benefits administration, and recruitment are often outsourced to companies specializing in these areas.
Which is the Best Example of Outsourcing?
To best answer this, we are going to take a very practical example from our own experience with one of our clients. Naturally, we will not be using the actual numbers but a very close approximation of it.
The Practical Scenario
Adam is looking to make use of the summertime and increase his monthly revenue from $50k to $70k; he will do this by hiring an additional 10 Virtual Assistants that will be directly working on cold calling, qualifying leads, and then selling the product.
Adam's constants:
Monthly revenue increase goal: $20k
Average monthly customer support workload: 120 hours
Number of VAs needed: 10 employees
Adam's calculated costs if he hires locally:
Average hourly wage for a local virtual assistant in his region: $20
Monthly Cost per VA: $20 x 120 hours = $2400
Total cost per VA: $2400 x 10 Virtual Assistants = $24k
Resulting revenue: negative $4k
Other uncalculated costs
If Adam hires locally, he will have to deal with:
Insurance
2-4 Weeks of onboarding his new team members
The cost of having to interview a lot of people for the position
The additional cost of offboarding after summer ends
Adam's calculated costs if he outsources his Virtual Assistance needs:
Average hourly wage when outsourcing to a BPO: $12
Monthly Cost per VA: $12 x 120 hours = $1440
Total cost per VA: $1440 x 10 Virtual Assistants = $14.4k
Resulting revenue: positive $5.6k
Other uncalculated benefits:
In the same scenario, the "uncalculated costs" above turn into benefits for Adam:
He won't need to pay insurance because the BPO already covers their own staff.
He won't need to spend more than a few days onboarding because the BPO already provides expertise in this area.
He won't need to be dealing with tens of interviews, only with a managerial staff from the BPO that informs him of the selections.
Lastly, he won't need to offboard the members because they've been hired for the season and the BPO handles that too.
In many cases, an argument can be made against using a BPO because in Adam's case, he would more efficiently manage his team internally, and he would be hiring native-speaking employees that increase the quality and percentage of his sales.
But, this is where our outsourcing services separate us from the proverbial herd:
At Everett Sky, all of our members are managed internally in a physical location in Europe, there is no option of remote work as we have found that that decreases productivity of our employees. Furthermore, because we hire exclusively in Europe, we also pay a lot of attention to the English-speaking skills of our employees; we only hire those that have native-level English, and we constantly train our staff for every type of job expectation.
While we did use a simplified example in Adam's business, it is still a very practical example of how outsourcing can save you lots of time and money, and the positives further increase when dealing with seasonal work that Adam's business requires. But, this isn't applicable just to Adam's business, nor are the benefits applicable to every single BPO, so you must choose the right BPO for your business needs and goals because not every business process outsourcing company can turn the disadvantages into advantages like we do at Everett Sky.