Outsourcing means to hand over internal work to external workers. As a contractor, freelancer, or business owner, you can both take on outsourced work or outsource work to others.
To outsource work means to delegate internal tasks to external workers, such as contractors, freelancers or other self-employed persons, or to another business. If you take on work from another company they’re outsourcing work to you.
There are many tasks in a business that they might not have time for or that aren’t within the company’s field of expertise. Those are common to outsource. Common examples include accounting, running payroll, cleaning premises, and maintaining IT equipment.
Why use outsourcing?
Companies that outsource tasks have realised that they don’t have sufficient time, expertise or work capacity to do the work internally, and so are looking to distribute the task or tasks to suppliers. These tasks are usually important for operations, but aren’t usually involved in core business operations: It’s more likely to be smaller tasks that can be done cheaper, faster, and better by an external party.
Some companies that choose to outsource work, might have gone through a rapid growth, and need to focus on more important tasks than what they’re outsourcing. Other companies might have lost or laid off employees and no longer have the internal expertise to complete the task.
The opposite of outsourcing is insourcing, which means that a business reclaims responsibility for tasks they have previously outsourced to someone else.
It’s important to have a contract
The relationship between the external worker and the company is regulated in a contract. The terms of the contract is agreed to by the parties, and they sign it either in person or online. The contract covers which tasks the worker will do, the deadline or limit of the work, as well as payment information.
First and foremost, if you’re choosing a supplier to outsource to, it’s important that they offer to do the service better or cheaper than your company can do on its own. In addition, factors such as geography, flexibility, price, and communication are important to consider. What kind of task you’re looking to outsource will determine what you require from an external supplier.