If outsourcing is so common, why are businesses ashamed to admit to it?
Outsourcing as a business practice is extremely common. Yet you wouldn’t think this was the case given the negative light in which it is often painted.
According to a study by YouGov, 70% of British businesses have delegated key services to third parties. The most frequently outsourced function is IT support, with over a third (34%) of companies saying that they have handed this responsibility over to outside suppliers. Meanwhile, 21% of firms have outsourced tech and software development.
There are plenty of reasons that a business might look to leverage the expertise of third parties, particularly if said business has limited financial or human resources. When quizzed about their motivations, almost half (48%) of businesses that outsource said that it was a way to overcome the challenge of accessing qualified and skilled staff that could do the job internally. Meanwhile, three in ten (30%) stated it is cheaper, and 28% claimed it is more efficient.
The evidence underlines that outsourcing brings significant and varied advantages. This begs the question: if the majority of UK businesses have at some point outsourced key operations, then why are so many reluctant to admit to it?
De-bunking negative assumptions
As with anything, public perception plays an important role in shaping business practice. A study by the Global Sourcing Association (GSA) found that a massive 80% of the British public do not think the outsourcing industry is helping the UK economy: over a fifth (22%) of people say they dislike the practice, and the majority (53%) consider it to be a method of cutting jobs.
Strong opinions about the practice are likely to sway how business leaders approach internal challenges; whether that is a shortfall of finance needed to create quality tech, or a lack of available expertise. One of the key issues appears to be that people are under the impression that by outsourcing offshore, UK businesses are denying job opportunities to nationals, and in turn stymieing economic growth.
Another common concern is the quality of the final product or service. How can businesses ensure that the quality matches what we have come to expect from a UK company, when there is much smaller oversight over the process?
Indeed, in many instances, the poor perception of outsourcing ultimately boils down to a sense of giving up control.
Businesses are typically keen to give customers the impression that every element of their service or product is carefully monitored and quality checked. Yet customers might feel that training, quality controls or resources in overseas firms are simply not on par with British equivalents. To many people, it might seem like deferring operations overseas comes with a loosening of guarantees.
Ignoring national interests, accepting lower quality and relinquishing control are three of the chief reasons why the term “outsourcing” has been frowned upon in the past. However, as we move towards a more connected digital landscape, whereby geographical barriers no longer dictate how, when, and where work can be done, it is high time to dispel these myths and understand the huge advantages that outsourcing can offer to British SMEs.
Outsourcing is not what it once was
Despite the misconceptions, outsourcing can in fact bolster the national economy if we consider the bigger picture. Indeed, finding international partners that can effectively deliver a product or service that would otherwise consume too much time or resource, will allow British businesses to save costs and ultimately remain competitive on the global market.
By focusing on what they excel at, and handing the rest to trusted partners, UK businesses will be able to enjoy efficiency and productivity gains. In turn, this will enable them to deliver products and services at a fraction of the cost, which can fuel their international growth. Not only will this strategy result in higher tax receipts to the state, but it will also create more jobs for elements of the business that remain onshore.
In terms of ensuring that outsourcing is “safe” from a quality standpoint, the acceleration of digital connectivity across the world, particularly over the past 12 months, has meant that internal teams can effectively manage external partners. Everything from agreeing on contractual duties to determining operational metrics can all easily be achieved through videoconferencing solutions, instant messaging platforms, collaboration tools and cloud computing.
The fact of the matter is that, today, many international tech hubs are able to offer highly skilled and knowledgeable specialists that can deliver results over and above what British businesses can offer. Breaking down misconceptions about the quality of work is the first step to leveraging skills and experience that are highly in demand within UK SMEs.
Staff in countries around Eastern Europe and the Balkans, for instance, are highly trained and use the same technology (if not superior technology) that any business in the UK would be leveraging. Their key advantage is that they face much lower overheads, so can deliver the same service for a lower cost.
Looking ahead to a new outsourcing model
As the UK economy rebounds from the COVID-19 pandemic and Brexit, businesses would do well to explore their options in terms of working with overseas partners and service providers. Looking further afield will not only open the doors to a much larger pool of skilled workers but will also allow companies to expand their operations and compete on the international market.