Developing a Sustainable Outsourcing Strategy That Supports Long-Term Growth

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Developing a Sustainable Outsourcing Strategy That Supports Long-Term Growth

With staffing shortages on the rise and labor expenses increasing, more organizations are considering long-term outsourcing. While that decision is, for the most part, sound, their success isn’t guaranteed. What must business leaders do to ensure their strategy is effective?

The Business Benefits of Long-Term Outsourcing 

More organizations are turning to long-term outsourcing in response to increasing labor scarcity, a growing need for scalability and rising staffing costs — especially in high-cost, critical departments like information technology (IT). In the United States, company spending on temporary staffing totaled more than $23.5 billion in 2020.

Business process outsourcing is becoming an increasingly popular concept. While outsourcing labor for high-priority projects is relatively common, relying on external staff in the long term has only widely caught on recently. Key drivers for its popularity include its affordability, flexibility and effectiveness.

Of course, organizations can use outsourcing to accelerate recruiting. This approach is ideal for sluggish hiring processes. For example, it would be particularly practical for cybersecurity positions since they take 21% longer to fill than other IT roles.

When business leaders outsource IT, accounting, copywriting or customer service, they gain access to the global talent pool, substantially increasing talent and expertise availability. Additionally, they secure greater flexibility for future expansion since they can adjust their reliance on third-party vendors by renegotiating contracts as their needs change.

More importantly, long-term outsourcing supports sustainable business growth because it contributes to significant cost savings — companies only pay for hiring and miscellaneous fees instead of salaries, benefits, training, onboarding and software licenses. 

Collectively, these benefits result in internal employees having more free time, enabling them to prioritize high-priority tasks that generate business value. As a result, growth rates and scalability can improve significantly. 

Key Factors in Developing Outsourcing Strategies

Decision-makers should consider several outsourcing factors carefully to ensure their strategy supports long-term business growth.

Consider these key factors in developing sustainable outsourcing strategies:

  • Evaluate outsourcing’s impact: Outsourcing may affect operational efficiency and corporate social responsibility since vendors’ actions directly affect internal departments and indirectly affect consumers’ brand perceptions. 
  • Prioritize shared values: One survey shows 66% of employees agree with their employers’ position on political issues, suggesting people prefer to work for organizations with similar values. In addition to contributing to worker satisfaction, having shared perspectives can foster mutual trust and respect. 
  • Set clear expectations: How often should vendors check in with internal departments? Do they need prior authorization to work overtime? Business leaders should consider and plan for every potentially impactful contingency.
  • Evaluate cultural differences: According to Thomson Reuters Co., 33% of survey respondents admit they turned down a potentially profitable business opportunity in 2021 for cultural reasons. Team leaders should work to foster a culture of inclusivity. 
  • Account for communication barriers: In seeking expertise and quality, decision-makers often broaden their scope, inadvertently selecting partners from a different time zone or country than their company. In these cases, accounting for language and communication barriers is key for successful outsourcing. 
  • Consider cross-functional collaboration: Collaboration is one of the key factors in developing outsourcing strategies. Business leaders should involve multiple departments with third-party staff to improve accountability and strengthen relationships. 

Without considering factors like outsourcing’s impact, vendors’ values and internal expectations, decision-makers may find their strategies lacking. 

How to Align Strategies With Business Objectives

Team leaders should align outsourcing strategies with business objectives. They should begin by assessing their preparedness as early as possible. What technology, talent and expertise do their partners have that they lack? Does their department have the resources and staff to coordinate projects with a third party? The answers to questions like these determine their readiness. 

From there, they should evaluate their budget — negotiating with the board and their partner if possible. Finding a balance between internal and external funding can help them maximize flexibility and optimize performance, making business objectives more manageable. 

A vendor’s reputability and reliability determine whether decision-makers can align their outsourcing strategies with business objectives. For reference, an irreputable, unreliable third party may struggle to coordinate, breach contract terms, steal intellectual property, damage brand reputation or deviate from quality expectations. 

Even if organizations outsource to a reputable third party, they should select an internal candidate for partnership management. This way, they can ensure they stay on the same page with their external staff. 

The Importance of Using Tech for Collaboration

Team leaders should strongly consider integrating technology into their existing communication processes to streamline collaboration and ensure transparency between internal departments and their partners. 

Many organizations experience coordination issues because of lackluster conversation and messaging skills. Considering 33% of employees report the internal communications they receive are inconsistent or conflicting — and 57% say they often receive duplicate messages — improvements are essential. 

IT team leaders should consider deploying technologies like chatbots, AI-powered assistants, automation systems or internal messaging applications to eliminate communication breakdowns and strengthen their employer’s relationship with vendors. 

The Final Word on Developing Outsourcing Strategies

Strategic specifics differ depending on the industry, business objectives and outsourcing needs. While decision-makers should generally prioritize communication, shared values, collaboration and monitoring to ensure their strategy is effective, true success will undoubtedly require more planning and effort to account for company-specific intricacies.