Benefits of Outsourcing
“Do what you do best, and outsource the rest” --Peter F. Drucker
Outsourcing: A practice used to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.
The goal of outsourcing is to:
- Lower costs
- Increase innovation
- Support increased demand
- Contribute to efficiency
- Maintain a skilled workforce.
The advantages of outsourcing are:
- Less staffing - You don’t have to hire more employees. When you outsource, you can avoid bringing employees into the company, which saves you money on everything from recruitment to training and benefits.
- Lacking knowledge or skills - No need for specialized knowledge or skills, outsourced vendors have specific equipment and technical expertise in their field. Effectively the tasks can be completed faster and with a better quality output.
- Free up limited capacity – Outsourcing allows companies to concentrate on core processes rather than the supporting ones, providing more time and resources to focus on their strengths, while eliminating the need to hire staff and secure work space.
- Reduced cost - Outsourcing is often driven by pressures to reduce costs and get to market faster. Outsourcing reduces costs, including indirect expenses; purchasing, inventory management, quality assurance, equipment technicians, material handlers, shipping and receiving personnel.
It is often smarter to outsource manufacturing, especially if the outsourcing company can produce the product with greater efficiency. Companies that can remain focused on their core mission are more efficient and more creative than those with too many moving parts.