Lots of large enterprises or companies make extensive use of outsourcing as this brings many advantages. However, not only the „Big Players“ can profit from outsourcing processes or tasks respectively, even for smaller or medium-sized businesses, the so-called SMBs, it is worthwhile to resort to external service providers. In one of our previous articles we already described jobs which can be outsourced without any problems. This article will highlight the advantages which outsourcing features.

Outsourcing is especially apt for tasks which don’t refer to the core competencies of a business. Consequently, a baker should not outsource mixing the dough for bread since he would give away his core competence. And who likes to eat the bread of a baker who is not convinced of the quality of his own bread? Nevertheless, outsourcing of other tasks could be advantageous for the baker.

1. Costs

One of the main advantages of outsourcing processes certainly is the emerging cost advantage. This can be traced back to several reasons. Outsourcing within one’s own economic area already facilitates savings in a double-digit realm; outsourcing to other countries often entails an even larger cost advantage. For instance, external service providers often can resort to specialized technologies respectively infrastructures or they have better trade agreements or labour costs. Furthermore, costs only arise when a project is being processed. If occasionally the services of the external service provider are not required, no costs arise either. Even for smaller businesses this pays off. The working hours a managing director spends on tasks, for instance, which are not really part of his core competence, are quite costly and not really efficient compared to outsourcing these tasks and thus freeing the managing director to direct his attention to his tasks.

2. Competence in areas of expertise

Another important advantage outsourcing harbours is the competence the outsourcing partners have in their areas of expertise. A baker will rarely devise the Internet presence of his business himself, since he does not have enough or any experience whatsoever in this regard. By outsourcing processes, a business purchases certain competencies which are at its disposal during the time frame of the contract with the service provider. Specialists often have solutions for problems which are impossible to conceive for a layman. On the other hand, specialists can preconceive problems due to their wealth of experience.

3. Quality

The advantage in quality is not to be underestimated, which is achieved through outsourcing. By virtue of the outsourcing partners’ expertise, the quality of the results of the outsourced process is increased. Of course it is possible that an enterprise can handle the tasks itself instead of outsourcing them. However, due to the lack of competence the quality will not equal that of a specialist. They deal with tasks submitted to them as a matter of routine and precision. The quality of their product is the guarantee for payment and possible follow-up orders.

4. Swiftness

The previously described quality goes hand in hand with quantity. Tasks which are rarely handled or for which the necessary know-how must be acquired first, can be handled much more efficiently by outsourcing. After all, external experts finish the tasks in their specific areas of expertise as a routine task and thus have optimized the required processes in regard to time and effort. Furthermore, they are oftentimes more flexible and can – if need be – swiftly be instructed to handle tasks.

5. Concetration on essentials

If a company outsources processes, which are outside its core competence, and passes them on to adequate specialists, one’s own employees can fully concentrate on their actual tasks again. This has the noticeable advantage that the business can be further promoted and the – financial and time – advantages thus gained, be used at other places in a sensible or profitable way. Nobody likes to struggle with tasks for which one lacks the competence, while work, that pushes the business forward, is neglected. This way, one can target in on one’s own area of expertise and thus work out a ledge compared to the competition.

6. Flexibility

Another advantage is the flexibility one gains. On the one hand the tasks, which have to be handled in the short term, can be promptly outsourced, which creates additional resources during peak times of the business. This way it can be guaranteed that during seasonal additional workloads or during strong growth periods nobody from the permanent staff will be overburdened. In case of unforeseen tasks, single projects or processes can be outsourced to service providers and thus time capacities be freed to meet the sudden demands.

7. Cost transparency

Outsourced processes can be easily checked in terms of efficiency. Especially smaller businesses often lack the overview of which processes effect which costs, since due to the necessity to accomplish the tasks the cost side is not taken into consideration. When tasks or processes are outsourced, concrete costs are shown quite plainly. This facilitates the transparency of cost centres. Moreover, the efficiency of the external service providers can easily be traced.

8. Talent pool

The co-operation with external specialists on a project basis implies temporary relief of one’s own staff. Since one – in principle – can freely select the outsourcing partner and thus fulfils certain criteria and demands for competence, one always has the right employee for the right task. The advantage of outsourcing is also the access to a vast portfolio of specialized people. A company can co-operate for the time being on a project basis with a partner, who is a specialist in one area of expertise, but who would otherwise not stand a chance to gain a steady employment in this company due to his/her high specialisation.

Thus outsourcing renders more advantages than merely saving costs and is therefore not only interesting for large enterprises, but especially for smaller and medium-sized businesses, too. Of course the described advantages don’t need to appear clustered, nor do they always have the same weight. Still, every successful businessman should take outsourcing into consideration and he will realize that it’s worthwhile more often than he had imagined.

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