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otfc quick guide: What is Outsourcing?

What is Outsourcing?

The practice of hiring another company or individual to perform a task or service that is normally handled by your own organisation. This is a common practice in today's global economy.

Outsourcing doesn't necessarily mean that you can't do a task yourself - it simply means that you have chosen to delegate to someone else. This could be for a number of reasons such as:

  • you don't have the time.

  • you don't have the resources.

  • or because you believe that the other party is better equipped to handle it.

What are some of the positives?

There are several potential benefits to outsourcing work, including:

Cost savings

Outsourcing can be a cost-effective solution, especially if the tasks being outsourced are labor-intensive or require specialised expertise. By delegating tasks out, a company can save on salaries, benefits, and other overhead costs, as well as reducing the need for investments in infrastructure or technology.

Increased efficiency

Delegating certain tasks can allow companies to focus on their time, resources, and energy on their core business functions; concentrating on the areas that directly contribute to their competitive advantage and strategic goals.

For example, outsourcing IT support or customer service can allow a company to provide better support to its customers without having to divert resources from other areas.

Access to expertise

Outsourcing can give a company access to specialised expertise and resources that it may not have in-house. External service providers are often experts in their respective fields, who can bring valuable knowledge, experience, and best practices to the table. For example, a small business may not have the resources to hire a full-time marketing team, but can still benefit from the expertise of a marketing firm by outsourcing its marketing needs.


Companies can easily scale up or down their outsourced services based on fluctuating demand, without the constraints of fixed internal resources. For example, a company can increase or decrease the number of tasks it outsources based on changes in demand or other business needs.

What are some of the negatives?

The risks associated with outsourcing, include:

Loss of control

When outsourcing certain functions, companies relinquish direct control over those activities. They must rely on the service provider to perform tasks according to expectations and standards. This loss of control can sometimes lead to concerns about quality, efficiency, and adherence to company values.

Security risks

Sharing sensitive data and information with an external party introduces potential risks to data security and privacy. It is essential to establish robust data protection measures, confidentiality agreements, and comprehensive information security protocols to mitigate these risks and ensure compliance with relevant regulations.

Quality control issues

Outsourcing can lead to quality control issues if the third party does not meet the company's standards. This can damage the company's reputation and lead to customer dissatisfaction.

In Conclusion

Outsourcing can be a helpful way to manage your workload and focus on your more important / money making aspects of your business, but it is vital that companies should conduct thorough due diligence when considering outsourcing. By understanding these negatives and implementing appropriate risk mitigation strategies, businesses can make more informed decisions that maximise the benefits all while minimising its potential drawbacks.


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