Outsourcing is the process of delegating certain tasks within a company to third party agencies. Outsourcing can help companies save on labor costs, access an innovative pool of talent, and enhance innovation in product development. It can also be done locally or internationally. In cases where the labor is sought from overseas nations, the process is referred to as offshoring. Outsourcing and offshoring serve the same goal but each of these options has pros and cons. Nonetheless here are the top 6 reasons why you should consider outsourcing or offshoring:

  1. Save on labor – outsourcing can allow corporations and businesses to access a talented workforce in overseas nations at significantly low labor costs. This can have a positive impact on the company’s bottom line in the long run.
  2. Focus on core competencies – outsourcing allows companies to get smaller yet essential tasks done by third party agencies. This frees time for them to focus on their core competencies leading to greater development of knowledge based assets.
  3. Access top talent around the world – Outsourcing and offshoring may also help organizations tap into a global pool of talent. This ensures access to important tacit knowledge that leads to innovation and business success. The global knowledge pool is very dynamic. Outsourcing promotes an effective way to access these dynamic capabilities in line with the needs of the business at that particular time.
  4. Free resources for investment – the resources freed as a result of outsourcing maybe used to invest in other important areas of the business. This will in the end promote healthy growth and expansion of the company. The freed resources may also create a capital buffer that enhances the company’s stability and security for the future.
  5. Outsourcing and offshoring may also help companies tap into new markets away from their current base. Working with talented experts from different countries provides additional insights on markets overseas and opportunities that may exist thereof. This knowledge can be used to promote new ventures that help the company expand and reach out to new markets.
  6. Cost savings – although savings on labor costs are the most common when it comes to outsourcing, there are other savings too that can be realized through this process. Offshore workers with the right expertise can get things done faster in an efficient way from a totally different location. This reduces the operational expenses needed to maintain a workforce support environment in the organization.

Businesses around the world will outsource for different reasons. However, one thing is clear. There is so much to gain from this. Outsourcing is now an important part of firm strategy and looking at the benefits above, it’s really not hard to see why.