The 4 Types of Outsourcing: What You Need To Know To Get Started

types of outsourcing

So, you’ve heard success stories of companies outsourcing tasks to remote workers. You’ve heard stats about the benefits of remote work including increased efficiency of workers, cost savings, and a reduction in employee turnover, to name a few.

Now you’re considering revamping your employment contracts to either introduce remote working options or increase the amount of employees that telecommute.

If this explains your current situation, this article is for you.

In this article, you’ll learn the top types of jobs companies outsource, the pros and cons of outsourcing each type of job, and the top 5 companies where you can hire remote workers for these types of jobs.

 

1. Professional Outsourcing

Let’s start with the most common type of outsourcing—professional outsourcing.

Professional outsourcing includes any type of specialized, professional services. This includes legal, accounting, purchasing, and administrative jobs.

It’s so common to outsource these kinds of jobs, you may either be already outsourcing these kinds of jobs or not even consider this outsourcing.

For example, let’s say you’ve hired an accounting firm to handle all your finances as opposed to hiring an in-house accountant. That’s outsourcing.

 

Pros of professional outsourcing

There are several pros of outsourcing professional jobs including:

High cost savings

You can save a lot of money when you are only paying for services provided. Not to mention, you don’t have to fork out additional cash for benefits and incentives.

Reduces overhead costs

When you hire an outside firm or a freelancer to handle professional services, you don’t have to worry about overhead costs like additional office space, office supplies, computers, and more. This significantly reduces your expenses.

Global access to talent

Let’s say your office is located in a smaller town where you don’t have access to a top lawyer, accountant or IT professional. You don’t want to risk hiring someone with mediocre skills just so they can come to the office every day. Instead, hire the best of the best and let them work remotely.

Ease of employment handling

If things don’t go as planned, it’s easier to let a contract worker go than it is to let an in-house employee go. Not to mention, you can quickly fill the position with a better fit when you are able to cast a wider net.

 

Cons of professional outsourcing

The benefits of professional outsourcing far outweigh the cons. However, there are some cons.

No exclusivity

When you hire a contract worker, you can rest assured you are not that employee’s only client. This means you don’t have the full attention of this contract worker.

Potential job loss

Sometimes what is a benefit to you can also be a disadvantage. Just as you have the ability to replace a contract worker quickly, a contract worker can easily replace you with another client if there isn’t a fit.

 

Top 5 companies for professional outsourcing

The world is truly your oyster when it comes to professional outsourcing.

For example, you can hire a local legal agency or accounting firm to handle your legal and financial affairs. You can also look at agencies globally to find a good fit.

If you’re more interested in finding one professional, here are some places to look:

  • Upwork – Upwork is an awesome place to find freelancers of all kinds.
  • FlexJobs – FlexJobs offers high quality candidate-sourcing and is a great place to find talent.
  • Remote Work Hub – This site offers free employer listings and global access to talent.
  • RemoteJobs (10up) – RemoteJobs is an excellent source for finding high quality candidates.
  • Remote.co – If you’re looking to build your remote team, start here.

 

2. IT Outsourcing

IT outsourcing

What do companies like WhatsApp, BaseCamp, Google, TransferWise, Skype, and so many other companies have in common?

Besides being wildly successful companies, they have all outsourced IT development tasks to remote workers or offshore developers at some point in time.

In fact, some of these companies have seen so much success with hiring offshore developers that they eventually hired their remote IT worker to come on as a full-time employee.

If you are developing an app, software, or technology then finding the right fit is much more important than finding a developer that is close to the office.

As such, seeking talent may require you to look into companies in India, Ukraine, Russia, or to find a developer that specializes in IT.

 

Pros of IT outsourcing

IT outsourcing is one of the most popular types of outsourcing and it’s with good reason.

Here are the benefits of IT outsourcing:

Costs

You can hire developers offshore for a fraction of the cost of hiring a developer at home.

Highly qualified

Even though you are paying less for an IT professional, you have access to trained, certified, skilled, and highly qualified developers—access you might not have in your hometown.

Quickly implement new technology

When you hire a quality IT service organization, you invest in a team that has the resources to start working right away. A project that may take months in-house can take a focused teams only a few days.

The ability to focus on other tasks

Instead of worrying about skilling up your current, less-qualified IT professionals or dealing with IT problems yourself, you can pass the tasks off to professionals and focus on the things you want to focus on at the office.

 

Cons of IT outsourcing

As mentioned above, outsourcing IT is common, even among the most successful businesses, but that doesn’t mean there are no cons. Here are some common cons:

Language barrier

If you hire someone from another country, you can potentially run into language problems. Before you hire someone, take the time to converse over the phone to make sure it’s easy to understand each other.

Time difference

If you ever run into an IT emergency, you may not be able to get immediate attention if it’s the middle of the night in Ukraine. Before hiring a remote IT employee, put together a plan for IT emergencies. Maybe consider hiring more than one IT employee from different locations as a contingency plan.

 

Top 5 companies to find a remote IT professional

If you’re looking for an IT professional, you have several resources. Here are 5 to consider:

  • Toptal.com – Find vetted IT developers here. They even rank their highest rated developers.
  • BariesDev – This company is an offshore development company supported by a workforce of 550+ software engineers providing high-performance solutions.
  • Upwork – Upwork is one of the best places to find contract workers…and that includes IT professionals.
  • N-ix – Ukraine has a great reputation for producing quality IT professionals; find one at N-ix. You’ll be impressed with their clientele.
  • FullStack Labs – They are a leading software consultancy headquartered in the USA, with nearshore offices in Colombia, South America.

 

3. Manufacturing Outsourcing

manufacturing outsourcing

Is your company producing a physical product that needs to be manufactured? Of course, you have the option to manufacture in the United States, but it may be more financially beneficial to outsource.

Outsourcing manufacturing involves hiring a manufacturing company to produce your goods at a cheaper price than you could get if you hired a company in the United States to do it. A common place to outsource manufacturing is China, and may be a good place to start.

Before delving too deep into where to outsource manufacturing, let’s talk about the pros and cons.

 

Pros of manufacturing outsourcing

There are several pros of manufacturing outsourcing, which is why if you look at the label of any of your clothing or products, you’ll most likely see “Made in China,” printed on it. Here are some pros.

Cost savings

It can cost a fraction of the price it would cost you to manufacture something at home to outsource manufacturing to another country.

Efficiency

A company that focuses solely on manufacturing has all the details worked out already. You can count on production running smoothly and products getting delivered in a timely manner.

Supports innovation

When manufacturing is efficient, it makes innovation much easier. Rather than trying to sell a product that spent so much time getting manufactured, you can rely on innovation, knowing your new product will get manufactured just as quickly.

 

Cons of manufacturing outsourcing

Economic impact

You’ve heard it a million times. Outsourcing jobs to other countries takes away blue collar jobs from hard-working Americans.

It’s true. When you outsource jobs that could be done here, it has an impact on the American economy.

However, keep in mind the United States has several manufacturing companies as well.

Ethics

The United States places strict protections on workers in manufacturing plants. Those same restrictions may not exist in other countries.

It’s important to consider your ethics and do research on the manufacturing company you plan to hire to make sure their practices are in line with your values.

 

Top 5 US companies for manufacturing outsourcing

There are several companies for manufacturing outsourcing in the world. Here are the top US manufacturing companies:

  • Patrick Manufacturing Inc. – They specialize in manufacturing wood products.
  • Align Technologies Inc. – This company specializes in making medical equipment and instruments.
  • Pilgrim’s Pride Co. – Looking to produce a food product? If so, you may not want to go out of the United States. Pilgrim’s Pride Co. is a great place to start.
  • Clorox Co. – Clorox Co. specializes in offering the production of chemical products.
  • Lennox International Inc. – This company manufactures electrical equipment and appliances.

It’s difficult to list the top 5 US companies for manufacturing outsourcing because products are so diversified.

For example, you may produce printed materials and none of the companies above could help you.

For a more comprehensive list of the top manufacturing companies, check out Industry Week’s 50 Best US Manufacturers.

For a list of top manufacturing companies regardless of country, check out this list. It also may fare well to conduct a Google search with your industry and location.

 

4. Project Outsourcing

project outsourcing

Sometimes companies need help with specific projects, but don’t need full-time help.

For example, they may need to redesign their website, write an ebook, or get help managing a paid search campaign.

This is where it may come in handy to outsource a project rather than hire an in-house or temp employee.

Let’s talk about some of the pros and cons of outsourcing projects.

 

Pros of project outsourcing

Here are some of the top reasons you should consider hiring a remote worker for smaller projects, rather than hiring a temp worker or assigning it to a full-time employee.

Cost savings

It is much cheaper to hire a remote worker to complete a project than it is to bring someone in-house.

Expertise

Imagine how much better your project will turn out if you hire someone with expertise to do it as opposed to trying to train someone on your team to do it.

Quality

When you hire someone who specializes in the type of work you need completed, the project will be high in quality.

Quick turnaround

An expert can turn around a project in a fraction of the time it would take for you to do it yourself or to delegate it to a non-expert member of your in-house team.

 

Cons of project outsourcing

Time management

Remember when outsourcing a project, it’s important to have a way to track the amount of time a remote worker is working, so you can manage their work and ensure proper invoicing.

Otherwise, you run the risk of getting charged too much or not paying your remote worker enough.

 

Top 5 companies for project outsourcing

When it comes to hiring someone for a one-off project, a good way to go is to look into a company that offers help from freelancers.

In fact, the best option may be to look into the same companies you would look into for professional outsourcing. Here is a quick review of those top companies.

  • Upwork – Upwork is an awesome place to find freelancers of all kinds.
  • FlexJobs – FlexJob offers high quality candidate-sourcing and is a great place to find talent.
  • Remote Work Hub – This site offers free employer listings and global access to talent.
  • RemoteJobs.com (10up) – RemoteJobs.com is an excellent source for finding high quality candidates.
  • Remote.co – If you’re looking to build your remote team, start here.

 

Wrap Up

Now you know everything there is to know to get started with the basics of outsourcing.

If you want to dive more into it, check out our complete guide to outsourcing.

 


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1 Comment

  • Anca Parasca says:

    Great article. My take to this was quality comes at a price. Our team is from different parts of the world. We have bad experiences with too cheap labor. My suggestion is to find someone that knows his/her price. If its to low its probably not good work.

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