Outsourcing is an important tool for optimizing business processes, especially in the context of growing competition and rapid technological progress. Companies transfer tasks to external contractors to focus on their core competencies and reduce costs. Thus, outsourcing, outstaffing, and staff augmentation Europe companies are attracting more and more attention. However, like any strategy, working with outsourcing companies has its pros and cons, which are important to consider when making decisions.
Outsourcing Company: What Is It?
First, we should define what outsourcing is. In simple terms, this is the case when the customer company transfers part of its work tasks or functions to another company (contractor) so that it can perform them instead of it.
Such a need can have many prerequisites: there are no appropriate specialists within the team to perform the work, periodic temporary or seasonal tasks, limited capabilities for maintaining a large staff of employees, etc.
Accordingly, an outsourcing company is a company that leases personnel. Such companies enter into an agreement to provide a certain service and, within the agreed conditions, provide specialists to complete the assigned task.
A simple example of outsourcing: the world-famous Nike company does not have its own factories, so it uses the services of contractors in the Philippines, Vietnam, China, Indonesia, and Taiwan. 500,000 people around the world are engaged in the production of Nike shoes.
What Services Do Outsourcing Companies Provide?
The range of services provided by outsourcing companies is very wide. It all depends on what exactly the customer needs:
- Recruiting and selection of personnel. An outsourcing agency has a wide base of employees in various industries and can help a business find and hire the best of them for positions.
- HR and administrative management. This includes the registration of new employees, payroll, taxation, management of information on vacations, dismissals, and other routine processes.
- Staff development and training. If necessary, outsourcing companies conduct educational courses, technological training, and lectures on safety for employees, helping to improve their skills.
- Housing and transportation for employees. In some cases, especially for projects with a large volume of work, outsourcers can provide accommodation for employees and organize daily transportation.
- Assistance in resolving crisis situations. Businesses can count on strategic support, as well as response to unforeseen cases when employees are unable to perform their duties due to illness or other circumstances.
This is just part of the services provided by an outsourcing company. This approach allows businesses to focus on their core business, freeing up valuable resources and time for developing a product or service.
What Is The Best Way to Hire Staff: Independently Or Through an Outsourcing Company?
The choice between independently hiring staff and contacting an outsourcing company depends on many factors: the volume of work, budget, strategic goals, the flexibility that the business is looking for, etc.
But it is worth noting that outsourcing personnel can have several advantages:
- Efficiency. Most outsourcing companies have extensive experience and a wide base of qualified personnel in various industries.
- Minimization of costs. Attracting an outsourcing company allows you to minimize the cost of hiring employees.
- Flexibility. Quick adaptation to business needs.
- Less administrative worries. The contractor is responsible for formalizing labor relations because in this case, the employer is the outsourcing company.
- Focus on core tasks. By cooperating with an outsourcing company, you can solve strategic problems, and focus and concentrate resources on core production, giving all additional tasks to outside specialists.
Independent hiring will be more appropriate in cases where:
- the company wants to build a permanent internal expert staff;
- there is a need for specialists with specific skills;
- professional activity requires maintaining a high level of confidentiality and control over processes;
- there is a focus on building a corporate culture and business identity.
Are There Any Risks When Working With an Outsourcing Company?
Of course, there are certain risks when working with an outsourcing company or staff augmentation agency. However, most of them are caused solely by the illiterate policies of the companies themselves. Let’s look at the main disadvantages of working with an outsourcing company:
- Loss of control. If a very large number of processes are transferred to employees of another company, this can lead to a loss of control over the company itself: the thread that directly connects management and business practice breaks down. It becomes more difficult to manage the structure. To prevent this from happening, the company can conclude a detailed contract and establish monitoring and reporting mechanisms that will ensure the regulation of processes.
- Data security. Not all specialists coming from outside are conscientious. At the same time, there is no way to strictly control them in what does not concern their immediate professional responsibilities. Therefore, there is a possibility of leakage of confidential information to which they have gained access. However, simple internal rules will help to avoid problems: use only trusted contractors, use data encryption, provide limited access rights to files, have backup copies of important documentation, and regularly conduct security monitoring and audits.
- Increased costs. If a small company outsources too many processes, this can lead to serious financial costs. This is especially true in cases where the expected economic effect is not calculated in advance and the use of hired specialists turns out to be no less expensive than maintaining staff. This is also due to the fact that some outsourcing companies ask for large sums for their services. To prevent an increase in costs, try to outsource processes partially and gradually. In addition, it is recommended to conduct a preliminary cost analysis and choose reliable partners who will clearly spell out the details of payment and the scope of services provided.
- Quality and efficiency. Sometimes the quality of work of outsourced specialists may not meet the company’s expectations, especially if there are no clear requirements and control. So, first of all, you should focus on them – clearly define work standards and plan regular monitoring of efficiency metrics.
Wrapping It Up
Outsourcing companies offer unique opportunities for businesses, including access to skilled labor, reduced operational costs, and increased flexibility. However, this approach requires careful planning to minimize the risks associated with loss of control and dependence on external contractors. If you are looking for a reliable outsourcing or staff augmentation service provider in Europe, we recommend paying attention to N-iX. Among the countries with the greatest potential for outsourcing or staff augmentation services are Poland, Ukraine, Romania, and other Eastern European countries.
