In-House Hire or Outsource? 3 Cost-Effective Outsourcing Techniques

officeCompanies are always juggling between hiring in-house talent or outsourcing. Three vital factors play a very important role while deciding in-house hiring vs outsourcing – cost, expertise and flexibility. The debate also has a lot to do with the scope of the project and the type of service the company requires.

For building the right in-house team, a company requires patience, diligence and a clear understanding of the skills it will need in the long term. When a company builds up an in-house team, it also means that they can be trained to the company’s specific needs, and they will be always “available”. In comparison to outsourcing, this can be especially invaluable in case of emergencies, such as a security breach.

While hiring in-house staff does have its bunch of perks, cost-cutting solutions like outsourcing is the first choice for small business owners for managing multiple operations against a restricted time frame.

Besides having another share of benefits like a higher level of effectiveness, round the clock work and procurement of faster results, outsourcing allows organizations to obtain high- quality services at a low operational cost. No matter what industry it is, companies seek outsourcing opportunities right from hunting a web expertise for an IT firm to order fulfillment in case of supply chain management.

So what can be the best outsourcing practices that companies can practice to reduce their cost?

1. Combine outsourcing with Out-Tasking

The biggest benefit of outsourcing is that company can hire an individual with a very specific skill set to take on a particular task. Once the task is completed, it may not require those particular skill sets again, so it makes sense to appoint the specialist only for a projected time-frame. One twist that most companies are nowadays doing to bring the best out of the outsourcing technique is out-tasking.

Out-tasking is one of the least dramatic forms of outsourcing. It is the process of breaking up the delivery aspects of any service by dealing with certain aspects of it internally and some externally. In contrast to pure outsourcing technique, if a company is engaged in the partial delivery of services, it is supposedly out-tasking – not outsourcing.

Out-tasking is ideal to reduce cost and is applicable to those companies whose in-house team does not have the expertise to handle certain service aspects. It can also be a useful tool for relieving in-house workload and utilizing third-party skill-sets at its best.

While Google is one of the top companies that takes pride in taking care of its in-house culture and employees, it is a fact that it has been taking outsourcing advantages for years. As a brand, Google is strongly implementing out-tasking techniques to take care of several projects including IT specialists, developers, as well as virtual assistant types of work.

One thing that really made the news is when Google decided to outsource phone and email support for AdWords to around 1000 reps. AdWords is Google’s top-grossing product, so they wanted to have the biggest ROI possible out of it. Simply using the out-tasking solution for this, they’ve succeeded.

Use Intelligent Outsourcing techniques

Intelligent outsourcing – multi-sourcing, involves getting engaged with more than one person for each element of a service. In this case, the company may tie-up with a number of specialized partners to accomplish one single task.

Multi-sourcing has a number of advantages over outsourcing.

  • It enables a focused result from an expert provider for individual deliverable
  • The company enjoys more competition during the sourcing of each service aspect
  • Since each partner is accountable to deliver one element of the service, the contingencies are reduced
  • Additional management costs that otherwise would have been applied by an outsourcing partner is removed

Alibab.com, that started as a small Internet Company called China Yellow Pages, is now the world’s biggest global marketplace. In 2014, the company scored the biggest IPO to theses day. What many don’t know is that the founder, Jack Ma outsourced the website development to a U.S. firm. During that time, there was a short supply of development talent in China, while developers in U.S. had the skills that Alibaba required. That’s just one reason, though. Another reason, why the company outsourced was because they were finding workarounds and viable ways to grow, overcoming all Chinese internet restrictions. Even today, the company relies on outsourcing partners for production and various other operations.

Multi-sourcing is definitely an intelligent idea in terms of both, cost savings and risk reduction. Brands have experienced that putting the procurement costs aside, this is a more cost-effective and efficient solution to achieve profitable business outcomes.

3. Using the hybrid model

Nowadays, even the smallest of businesses have a wide range of requirements, including web related work, graphics designing, digital marketing and customer resource management. The whole network needs to be constantly managed and maintained. Considering the need for abundant expertise, the question arises whether to hire a full-time, in-house team or contract out and bring in experts as per need.

Sometimes companies adopt the hybrid model, to cope up the “talent hunt”. In a hybrid model, a company hires a freelancer and also has an in-house talent to do the required task.

Obinna Ekezie, co-founder, and CEO of Wakanow, a full-service, online travel company in Africa says, “At Wakanow, I use a hybrid model where some of my talent is in-house (technical side of website development), and some is outsourced (digital marketing and SEO)”

Opera – a modern and light web-browser that was born as a research project under Telenor, was launched using the hybrid model because the company wanted to avoid squandering all the money on hand. The company opted to outsource some part of the project to developers across 25 locations around the world to create and implement their platform.

For making use of outsourcing opportunities, Brands and company owners need to have a market awareness. With agencies like Upwork and Freelancer, it takes very little time to find talent fit for a specialized task. Easy access and approach to outsourcing talents means that projects may get completed quicker, and the product can possibly reach the market quickly.  Also, hunting talent from anywhere in the world can allow the company to use dollar arbitrage to take advantage of different prices across different markets making this model both, cost-effective and efficient.

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