What is Outsourcing?
Outsourcing is when you get someone else to work for you. The person or people do not have to be physically present but are equipped to handle all the work assigned to them.
However, you might have heard people talk about “near-shore” or “offshore” outsourcing and you might be wondering if there is difference. Well, let’s break it now.
Near shore outsourcing
This is when you assign business processes to neighboring countries. For example, an American based company can assign tasks to another company based in Mexico.
On the other hand, offshore outsourcing is when businesses assign part of its business processes to foreign countries on different continents, with the goal of drastically reducing operating costs.
What is Insourcing?
This is when a business practice is performed within the operational structure of the organization. Insourcing is inclusive in nature. This means that hired personnel becomes part of the organization even if they work remotely.
Insourcing has slight similarities to outsourcing. The tasks that require to be taken care of remain the same and the basis of engagement is either semi-permanent or contract-based.
Insourcing VS Outsourcing
There is a distinctive difference between “outsourcing” and “insourcing” that should be clarified. It’s important to understand the difference as you look to leverage it as a part of your business. Both have a specific function and fit in the business marketplace, but it is important to understand your objective and long-term goals.
Outsourcing is hiring an outside organization to complete specific tasks. Outsourcing processes are usually non-essential, that is to say all the decision-making processes remain with the company and other roles such as tech support and client services are outsourced.
Companies such as Google have outsourced some business processes in order to improve efficiency. Google added 1000 reps to service 60 countries (handling 10 000 calls a week).
One of the key elements of outsourcing is the ability to change service providers if need be or desired. This means your business is not permanently tied to the service provider. Virtual outsourcing is not a static model so one can have several companies work for them in a short space of time.
Additionally, one major difference between outsourcing and insourcing is the methods in which work, projects, or tasks are performed between various companies and departments. With outsourcing, virtual tasks are managed away from the organization. There is a limited amount of control for the company and there is a need for constant communication between the company and outsourcing partner.
Furthermore, when you outsource work, you will get a managed team. What you only need to do is to assign work. Insourcing on the other hand, is a business practice performed within the operational structure of the organization. Insourcing is different in that; it functions within the organization giving management more control over the process and eventual outcome of the proposed task.
When you adopt an insourcing model, you will always have to manage your team. Even, sometimes, you have to train your team as well. Several other major companies followed GM, including Bank of America, American Express and Visa have since started insourcing.
Why do companies outsource?
As a business owner, you understand how complicated a growing business can get. Operating as the manager, accountant, marketer, sales representative and human resource manager can be a daunting task if left to one person.
At the same time, hiring people for these necessary roles can affect your bottom line. The cost of skilled labor is on the increase and businesses are competing to acquire these much-needed skills for their own businesses.
According to Wasp Barcode Technologies, the five biggest challenges facing small businesses include;
However, outsourcing has made it easier for business owners to scale while managing the costs associated with growth. The findings of a research conducted by Clutch shows that 37% of small businesses currently outsource a business process.
Additionally, 78% of respondents in a Deloitte’s survey say they feel positive about their relationships with other virtual team vendors. Asked about what why they outsource, the respondents in the Deloitte survey mentioned cost cutting at the top of the list.
Similarly, business process outsourcing is not only for small companies, large multinational companies also engage in insourcing in order to reduce costs.
Another survey by Deloitte found the below to be the drivers of insourcing.
This goes to show that outsourcing is not only a growing trend among businesses; but it also plays a critical role in the growth of these businesses.
Outsourcing to Africa
Africa is fast becoming the outsource destination of choice to many European and American businesses. Even though India and the Philippines could be argued as the top outsourcing locations in the world, Africa is where the future lies.
The limiting factors such as access to technology and the Internet are no longer an issue in most African countries as significant developments in telecommunications have brought about a new era of business opportunities.
Furthermore, with high unemployment rates, Africa possesses a large pool that business abroad can benefit from at a lower cost.
According to Focus Economics 6 African countries are in the top 10 fastest growing economies in the world. This shows the rate at which Africa is becoming competitive in the global market.
To put it in context, there are more than a dozen African countries where English is an official language. These include Zimbabwe, Uganda, Zambia, Botswana, Namibia, Kenya, Sierra Leone, Liberia, South Africa, and Nigeria.
Additionally, a large number of countries where English is the official language are the British Empire former territories. This not only reduces the cultural affinity gap, but also ensures that businesses are assured of excellent English-speaking capabilities.
What are the benefits of outsourcing?
It gives you control over your personnel. This means that you can monitor their work and see if there is progress.
- Business and cultural alignment
Insourced employees are better connected to the day-to-day operations and culture of the business, they are more likely to elevate it as a great place to work, helping you attract more talent.
- Focus on core business
The experts focus on their core business and you focus on yours. Insourcing means that you’ve selected the rightful individual to perform certain tasks.
- Improved employee morale
A show of investment in the workforce will boost the morale of your employees.
People work better in a space that has peers. The synergy between your business’s departments will accelerate success.
- Access to skilled personnel
You have more access to qualified individuals, with expertise in a variety of fields allowing you to choose according what fit in to your organization.
- Increased in-house efficiency
As afore mentioned, a business needs to focus on their core abilities in order to achieve productivity. After allocating the tasks to us your outsourcing partner the workload becomes less and you are able to develop an efficient internal task force.
Successful outsourcing to Africa
In order to successfully outsource to Africa, you (just like any other destination) have to invest additional time during the initial stages of the outsourcing relationship to ensure value is achieved through setting clear expectations from the onset.
Many countries in Africa have highly educated people and an ideal outsourcing partner will ensure that you have a one on one interview with potential candidates before you make the final decision. This will give you a chance to assess the candidate’s communication skills, confidence and if he or she will fit in well with your existing team.
Time zone differences
Insourcing from Africa or any other place should be simple. The time difference should not worry you. Your insourced virtual team works according to your schedule or working hours.
What to consider when selecting an Outsourcing destination in Africa
Now that we have covered what outsourcing is and how it is adding value to businesses around the world. The next step is to choose the right outsourcing destination. There a number of destinations a business can choose from when making an outsourcing destination, the most common options being Zimbabwe, Egypt, South Africa, Nigeria and Kenya. However, there are several factors that every business should consider when outsourcing.
Cost of labor
For a growing business, hiring new employees is inevitable. The team that a business has can be the competitive advantage that it needs to grow and increase profit.
That being said let’s point out one fact: skilled labor comes at an expense that most businesses cannot afford at the initial stages. A survey by glassdoor shows that US companies spend upward of $4000 on hiring a new employee alone.
This is just the cost to hire a new worker and when we then add other full-time employee related costs such as medical insurance, pension and paid leave. The cost skyrockets.
However, outsourcing from location such as Zimbabwe, can lower your payroll costs by up to 75%! Now that’s a saving. Outsourcing from Africa not only benefits the business receiving the service but also creates much needed employment for the skilled and qualified people in Africa.
The major driver of outsourcing is the increasing advancements in technology. People no longer have to be physically at the same location to get work done.
Before making the final decision, take time to find out whether the outsourcing provider has invested in enabling virtual staff to communicate effectively with your organization. There are a number of tools that you can your to effectively manage your communication with your virtual teams.
The thought of trusting someone else with your business can be scary at first. But when you partner with a professional outsourcing company, you will be rest assured your business will be in good hands.
Zimbabwe, for example has one of the highest literacy rates in Africa and with over 20 universities, there is huge talent pool that is qualified to take your business to the next level.
Cultural affinity and Linguistic capabilities
Most outsourcing destinations have a totally different culture and don’t speak English as a first language. However, some countries in Africa are former British territories, which means their culture and English-speaking skills are good for business.
Data security is huge topic when it comes to outsourcing to the constant sharing of data. When choosing an outsourcing partner, you need to ensure that the organization has put in place robust data security protocols. Lack of data security protocols can result in cyber-attacks and hacks that can potentially disrupt business.
Benefits of outsourcing from Africa
There are many benefits of outsourcing your business processes. Some of them include:
Outsourcing frees up your time
You can outsource general repetitive tasks to your outsourcing partner in Africa. This will allow you to focus on core areas in your business. Dental practices for example outsource task such as insurance verification and patient scheduling, allowing the dentists and other staff to focus on other key areas.
Outsourcing Saves Costs
Statistics show that the added annual cost for a new position can equal up to, or more than 150% of the actual pay. By adding a position at an annual salary of $36,000, the “real” cost to the business could be in the $54,000 range. The option to add a Virtual Team to your business can reduce this by as much as 70%.
Outsourcing tasks, allows your business to maintain a financial flexibility when there is an uncertainty in demand. You can scale up or down comfortably. Some business process providers offer short-term service removing the stress of a lengthy contract.
Outsourcing tasks can reduce the workload on your current staff and allow them to focus on key areas thereby increasing efficiency.
John Awtry CFO of Crossvale said “Global BP has helped us tremendously. We have gotten value in multiple areas: HR, Accounting and general back office administration. For example, Victor is an extremely high-level accounting professional. He is able to work with minimal supervision. His work hours coincide with our time zone in the US!”
How to start outsourcing
- Understand your goals
Just like all processes, you need a plan is order to give direction. The first step before you start outsourcing is to understand your business goals and what you want to achieve through insourcing.
- Identify the need
Outsourcing should add value in your business and one way of doing this is to first identify were your business needs help. By looking at your internal Processes, you can identify areas that you or your staff lacks. You might not be great at Digital marketing but understand the need for it for your business to grow and instead of trying to do it by yourself, you can simply outsource it.
Another example or a need for outsourcing is when you find you or your employees constantly bogged down by work, missed deadlines and reduced efficiency. Insourcing can reduce the workload of you and your employees at a fraction of the cost.
- Job matrix
Once you have identified the need for insourcing within your organization, you need to identify the roles that you want the virtual employee to fill. One way of doing this is to fill in a job matrix form, which you can find online, or one that is provided by the outsourcing company.
- Contact BPO providers
Now that you understand the objectives, identified the need and outlined the role that you want. You can contact an insourcing provider and start the discussion.
Get in touch with us for simple and affordable insourcing services customized to your business needs.
Onboarding your virtual team
As soon as the recruitment process is done and you’ve selected your perfect candidate, comes the process of onboarding. Similar to induction, onboarding is the process of educating and showing your virtual team around. Establish a concise and strict communication policy. Communication policies differ with the team dynamics, make sure you find out what works best for you and your team. Finding a task manager that simplifies to-do-lists helps make following up on tasks easy. Platforms such as Asana or Zoho keep a track record of turn around time and work flow process.
Onboarding simply put is getting to know your team better, giving them the rules and understanding how best to work with each other.
How to communicate with your virtual team
Virtual Team (VT’s) members work remotely from a different geographical location. This requires them to leverage technology to ensure consistent communication is maintained with their employer. Communication is key to the success of any VT. The most commonly used methods to communicate with virtual team members are phone and video conferencing.
#Myth 1- Outsourcing makes you lose control of your business.
Outsourcing in fact gives you autonomy and authority over your virtual team. This means that you can oversee how the work is done and you have the ability to control quality.
#Myth 2- Outsourcing is limited to big businesses
This is untrue. Outsourcing is a practice that can be adopted by any business of any size. Outsourcing is a cost-effective measure which any business is willing to do.
#Myth 3- Outsourcing means poor quality
Your virtual team is highly qualified and, is there to ensure that the work is done efficiently, to the best of its quality and at great time.
#Myth 4- Language barriers and cultural differences hinder progress
Outsourcing with a partner like Global BP Solutions guarantees you a team that is able to blend in with your culture. Countries such as Zimbabwe speak English as their first language
#Myth 5- Outsourcing compromises company security
There are security protocols in line that help keep data and other elements of your business secure. With strict IT policies and tech support the fear of cyber attacks is combated.