Outsourced Service Providers: Can You Really Save Money By Outsourcing?

Outsourced Service Providers: Can You Really Save Money By Outsourcing?

Picture of Daven Michaels

Daven Michaels

New York Times Bestselling Author, 30-year business veteran, and Executive Chairman of CurrentC Group.

Outsourcing has been an old concept but has grown increasingly popular in recent time. in this practice, a company or business assigns some aspects of their functions or tasks to outsourced service providers who may be located outside of the country where the business is situated (offshore outsourcing), or within the same country where the business is situated (onshore outsourcing). This practice has increasingly grown popular basically because of the great cost-saving benefit. Indeed, a company or business can undoubtedly save money by outsourcing some or all office tasks.

Other Factors that Promote Outsourcing

Sometimes, companies or businesses choose to outsource some or all their business tasks overseas even when it appears they will save more by handling those tasks in-house or in-country. In this case, there are other factors influencing such outsourcing decision. For instance, some companies or businesses outsource tasks offshore just to get applicable tax advantages. The task benefits may be in form of direct tax rebate or tax benefit that comes with hiring large number of workers in the offshore country.

In countries or regions that are highly industrialized, wages and facilities costs can be quite high. On the other hand, a company or business that chooses to outsource outside of those industrialized regions will ultimately pay lower wages and incur minimal costs of facilities without losing touch of quality. So, for companies that wish to minimize as much cost as possible and at the same time get quality output, taking advantage of outsourced service providers is the smart way to go.

A good number of companies combine both local and outsourced workers in handling their tasks, while some some choose to completely outsource their business tasks offshore. Whichever way, there’s always substantial cost saving with outsourcing, which is the reason why this business solution has become a widely sought after practice in the present day business environment.

Ultimately, cost saving via outsourcing is achieved in the following ways;

  • Overall lower wages and salaries compared to handling the task in-house by hiring employees.
  • Overhead costs that come with hiring employees in-house are reduced or completely eliminated in the case of outsourcing the entire business.
  • Bonuses and other benefits that are compulsorily paid to full-time employees are eliminated or minimized when you outsource your entire business tasks or some aspects of your business.
  • The cost of renting and furnishing office space for the different departments or sections is eliminated or reduced.
  • Cost that may come with potential business or task risks are shared between the company and the outsourcing outsourced service providers. In fact, depending on the contract signed, the outsourcing provider may completely shoulder any potential risk associated with the tasks outsourced to them.

Obviously, a company or business is able to achieve cost saving virtually in all aspects by choosing to outsource some or all of it tasks instead of hiring employees to handle the task in-house. And ultimately, the money saved by using outsourced service providers is ploughed back as additional profit and can be used to further expand the business.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.


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