Is Outsourcing Cost Effective in Business?

As a business owner, keeping costs low allows you to turn the maximum profit possible, which is of course always going to be the aim. But when it comes to outsourcing, it can be a tricky one. Are you wondering is it cheaper to outsource as opposed to hiring new employees? The answer is a resounding yes. Here’s why.

Yes: Hiring New Workers is Time-Consuming & Expensive

Hiring new employees to work in your business is quite the task. You have to spend money on advertising the role, reading through CVs, interviewing and then training the selected candidate. All of this consumes both time and money and takes away valuable time and resources from existing staff. Not only do you need to hire workers to do the roles in your business, but you need to have somewhere for them to work too. This is likely to mean more rent and higher running costs on bigger premises. Not to mention the additional equipment you will need to buy. For example, your IT team alone will need powerful computers and all of the latest software which isn’t going to come cheap. If you go with managed IT services from another company you would avoid all of this. So while you will have to pay a company for their work when you outsource, there’s a huge range of costs you get to avoid making it a more cost-effective option. 

Yes: Outsourcing Can Increase Productivity 

Hiring new staff is likely to cause productivity levels to drop- in the short term. While they are being shown the ropes and settling into the job things are likely to slow down. Admittedly, once you have hired workers and they’re established in their role, productivity will increase again. But if you’re expanding rapidly and hiring new people all the time, the cumulative effect of this might end up showing in profits. But you can avoid this drop and hassle in general simply by outsourcing. 

Yes: It Can Save Money By Avoiding Lawsuits 

When you keep different departments in-house, you absolutely have to ensure that things are being done correctly. For example, the finance department makes an error which affects your tax, you could end up in serious trouble. If Human Resources don’t deal with workplace harassment or bullying in the right way, it could lead to a lawsuit. When you outsource, you have peace of mind that each company is professional and at the top of their game. It’s a weight off your shoulders since it’s not being dealt with by you, and the work is still being done to the best standard. If it means avoiding mistakes and lawsuits, it could be a good move financially for your company.

Outsourcing allows you to keep your in-house team small and efficient. Despite the fact that you’re essentially handing over elements of your business to other companies, it actually allows you to keep better control over your business. The legal and practical issues around some parts of business are complicated and best left to professionals in the field. 

Do you currently outsource any areas of your business? If not, is this something you plan on doing in the future?

I hope you enjoyed this article about the pros and cons of outsourcing to make your business more cost effective

Interested in more articles about saving your company money?

Read My Posts:

- 5 Roles Your Company Should Consider Outsourcing

- 4 Ways To Save On Overhead

Published by Michael J Schiemer
Owner of Bootstrap Business
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