The costs of outsourcing

Compared to pre-pandemic conditions, 81% of employers² believe candidates have become more demanding with salary expectations. With organisations around the world struggling to find quality talent at affordable prices, business leaders are turning to outsourced solutions, both onshore and offshore, to solve these labour shortages.

We know outsourcing opens up access to a global talent marketplace, but can it solve the issue businesses are having with rising wage costs? What about the other costs associated with outsourcing? Is it worth it, or does it eventually add up?

In this blog, we discuss just how much it costs to outsource and what your business can expect.

Hidden costs of outsourcing

Put simply, outsourcing can save your business up to 70% on employment costs. This includes savings on recruitment, infrastructure, labour management and onboarding but is also completely dependent on the outsourcing provider you partner with.

What we want to focus on here are the costs you need to keep in mind, the ‘hidden costs’, that if identified early on, can ensure an effective return on investment from your outsourcing venture.

Training and development

Depending on the outsourcing model your outsourcing provider uses, they will often take care of onboarding and infrastructure setup for your onshore or offshore team. However, your outsourcing partner isn’t you. You will still need to invest time and resources into getting your outsourced employees up to speed on how you want them to work and orientate them around your organisational ethos.

The outsourced hiring process will ensure you have an outsourced team that has the necessary skills for the job, but they also need to be trained to understand the policies and procedures to get the job done properly. How long can this take? Sometimes weeks, sometimes longer depending the complexity of what they are doing, but is an important startup cost to take into consideration to ensure that the return on investment down the track is worth it.

Contingency plans

What happens if there is a natural disaster that affects your outsourced team? What happens when the internet cuts out or an electricity shortage? These unforeseen events that can come up, like a recession, are important factors to consider when choosing your outsourcing partner. Do they have contingency plans in place to ensure your outsourced operations remain operational? Make sure to delve deep into understanding how they handle unexpected events to avoid any potential loss of investment.

Outsourcing transparency

Like with any business transaction, there comes a risk that you will be oversold and undelivered. Choosing to partner with any organisation will always pose this risk, especially when outsourcing. To avoid having this affect you, do your research, ask for recommendations, set clear KPIs and ensure your outsourcing partner is being as transparent as possible. This is your business’s reputation and who you partner with can affect your brand. Choose wisely and emphasise transparency throughout the partnership.

Complacency leads to failure

Outsourcing is not a set-and-forget business venture. Just like any other investment, the economy changes and your business strategies have to adapt. Markets evolve and you should regularly review your outsourcing agreement to ensure you continue to receive the best return on investment you can find. You want to maximise your outsourcing potential and get the most out of the investment.

Upgrade technology

Outsourcing, as it is a service that utilises confidential information from within your company and sends it externally to your trusted outsourced teams, relies heavily on cloud-related technology. Without the ability to transfer and communicate information, your outsourced venture is doomed to fail. Double-check your data security protocols and systems to ensure that when it comes time to hire your outsourced team and start sending them information, everything is secure. You may even need to review your hardware and software processes to ensure they align with your new outsourced business model.

Outsourcing: onshore and offshore

If these costs haven’t phased your desire to start an outsourced team for your business, it’s time to consider who to partner with. You will want a partner who is market-leading and industry-recognised to provide you with the best people locally and offshore to deliver results. When a business partners with Probe CX, they can rest easy knowing they have teamed with an outsourcing provider that boasts the experience, knowledge and technology to help them rise above the pack.