A brief history of outsourcing and how to make it work for you

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A businessman pressing a Outsourcing button on a transparent screen.

Outsourcing is a modern term used to identify an action that has been around for a very long time. When we look at homeowners that have maids, nannies, and landscapers, we're seeing it in the simplest of forms.

As we move into the business realm, we see companies bring in people to perform functions for cost-saving purposes.

The history of outsourcing dates back to the late 1980s to the early 1990s. It was then that the process took on the name. What you need to know about outsourcing is that it was introduced as a business strategy.

Business, as major multinational corporations understood it, was changing and there had to be a way to grow and keep up with global markets. Over time, the challenge became how to get the best and brightest minds without going bankrupt.

Someone saw the need and built a model to meet the demand.

Do you want to learn more about outsourcing? Keep reading to see how it benefits companies and how to make it work for yours.

From the History of Outsourcing to Today

Outsourcing is a process of hiring a company specializing in a particular job function to perform that function for your business. They can provide external support to business processes or send in qualified individuals to work onsite.

The best way to outsource is to do a complete review of your company's positions and employees. See what tasks are being duplicated and which once are not being performed to the highest levels.

You will also want to see which roles do not require a fulltime employee, and which ones are accounting for the most overtime.

Once you have this data, research to see if there are outsourcing opportunities in that area.

Popular Outsourced Roles

Not every job is right for outsourcing. In some instances, a company may simply decide to go with a temporary or staffing agency. On the surface, using an agency to fill a receptionist role is the same as outsourcing. 

At a higher level, it is not.

When it comes to true outsourcing, businesses are looking at highly skilled professional roles vital to the companies success. The level of experience and training the person or company brings to the table is in high demand.

Here are a few roles.

  • Accounting 
  • Content and Digital Marketing
  • Human Resource Talent Specialists
  • Information Technology
  • Payroll Services
  • Public Relations
  • Systems Developments

Roles in these areas can include more specialized fields to fit the client's needs. This is beneficial because the skills you may require for one project may not be needed for the next. Outsourcing provides the client with what they need when they need it.

Cost-Effectiveness

The history of outsourcing has proven the cost-effectiveness of using this business model benefits the company. There are various ways the company saves money by outsourcing.

Benefits and Salary

Bringing in a systems developer could mean a six-figure annual income. Because it is such a competitive market, you'll need to have a great benefits package. 

Office Space 

Outsourcing services can eliminate the need for bigger office space. Eliminating even one position could give you a much-needed conference room. Or maybe you want to have a designated area for the printer and copier.  

Security Protocol

When a company outsources it's IT Department they gain a higher level of security for their systems and data. Most IT outsourcing firms off cloud-storage. This alone could save a company in the event there is a power outage or damage to physical servers.

Levels the Playing Field

It is important to learn more about outsourcing beyond the cost-savings. Outsourcing can place your company on a new level. Smaller companies become more competitive because they have greater resources.

When you outsource technical support your customers get 24/7 support when they need assistance outside of regular business hours. It also benefits your regular employees because they receive immediate assistance.

There is no more putting in a ticket and waiting for the internal employee to get to them.

The playing field is also leveled when it comes to implementing new products or services. You'll have a development team working alongside your core people providing agile techniques.

Boost Your Industry Expertise

Having high skilled individuals backing your company will boost your industry expertise. Now smaller firms can become more competitive when bidding on projects against more established companies. 

No one has to know the people at the table representing your company are not regular employees. When they show-up they perform as members of your firm.

This is vital to the success of a young company just starting out and looking for their first big contract. They will appear more confident and demonstrate why they can be a viable asset.

Allow You to Reinvest in the Company

The money your company saves by outsourcing certain positions and job functions can be used to reinvest in the company. You can upgrade the technology currently being used which can boost morale. 

Perhaps you need a bigger location but salaries and benefits are a huge financial burden. By outsourcing, you can free up a lot of money.

Then there are the instances where a business has put off hiring employees in other roles because of the need to have technical support on-site. This usually leads to other employees taking on double roles. They are putting in longer hours and working harder because it's the only way the work will get done. 

By simply outsourcing IT support, companies can build stronger staff to cover areas like customer service. Office support staff can then get off the phones and focus on tasks they were hired to perform.

Are You Ready to Outsource?

The history of outsourcing shows the foundation of this strategy and how it has grown over time. It is no longer seen as a taboo subject or one carrying a negative connotation.

There are many case studies available on business models. To learn more about a specific company, visit our section on companies and select from our extensive list.