Is everything better in-house?
Deloitte predicted that by 2023 global spending on outsourcing will reach $731 billion. Although it’s still a bit early in the year to confirm or disprove that prediction, the trend is clearly that outsourcing is on the rise.
For years now companies have mostly been outsourcing two types of services: Business Process & IT. As you could probably guess, the share of outsourcing contracts for IT services is the largest at 72%. Global Enterprise Partners is a global recruitment agency which specializes in tech, meaning we ourselves are a Business Process service (staffing), but we provide our clients with the biggest tech specialists in the world when they need them. So technically, we are in both major worlds of outsourcing. However, we do understand that there are some major disadvantages businesses have with outsourcing that we cannot sugar-coat. Still, as a business which has such a holistic grasp on the world of outsourcing, we wanted to look at some research and weigh its pros and cons.
Why is it not so good?
The first problem businesses have with outsourced specialists and services is managing them. More specifically, knowing what work is done and when, and keeping an eye on whether pre-set objectives are being met. Naturally, it is a lot easier to manage employees who are within your business than contractors. And that is also where the other potential problem lies – the contract.
Whenever circumstances call for some more flexibility or expansion in services, the contract must be changed to cover that. This also wouldn’t be a problem with an in-house team. What’s more, in most cases, contract changes come with a cost, which means the cost/benefit predictions for the service itself need to be re-evaluated with every change in circumstance.
That makes outsourcing sound like a completely unmanageable endeavour that is legally a massive hassle, and where the price never stays what it was promised, especially in the constantly-changing world of IT. So why does anyone go for outsourcing?
Why is it good?
Research shows that the price, or better said the cost, is the main reason businesses choose to outsource certain operations. Indeed as we said, the contracted cost can vary throughout the lifetime of a certain service, but that cost is still much less than investing in the hiring process, investing in onboarding, training, employee support, benefits…
When you outsource you look for qualified professionals who need to be minimally “brought up to speed” – you know exactly what you’re looking for, when you find them you know what to expect. And the contract you have with the outsourced professional actually guarantees that quality. The existence of an agency hinges on its client relationships and their performance.
Outsourcing also means working with people who have commitments to other clients as well, or have worked with many different companies and organisations in a relatively short time span. Usually that raises alarms in people’s heads, but again – performance is legally guaranteed. So your external collaborator’s experience with others actually only benefits you, since they have a more holistic perspective on your market, business and the job itself, which can do nothing but help push your business forward in a shorter amount of time. Additionally, it is shown that employers do understand that excellence cannot be achieved across all areas, and they are happy to focus on their “core competence” while outsourcing the rest.
So what does this all mean?
The perils of outsourcing, as we see it, are rooted in a lack of trust. And truly, how can you have it without actually knowing someone? Agencies like us are very aware of that problem, which is why we make quality guarantees intended to build a relationship with the people we work with, and show them the immediate results of our collaboration.
In our case, we rigorously qualify all the talent and professionals we work with even before we suggest them to our clients. Also, since we are very aware of how the Enterprise Technology market functions, what software is most in use and what problems companies are experiencing with it, we also know what candidates to search for even before we know of available vacancies.
To sum up, outsourcing can definitely be troublesome, but it’s also a shortcut to getting what you need in the shortest amount of time possible, at the lowest possible cost. With outsourcing it is important to try take as many steps to learn as much as possible about your collaborators and their process before you do collaborate.
And we for one are very happy to help with that -