What is Outsourcing and how does it work?

Outsourcing is a practice some companies have of subcontracting products

or services from an external supplier. In general terms, the goods or services
that are subcontracted are not part of the core business of the company
that is subcontracting. The most common outsourcing activity is hiring
freelancers or professional agencies to perform highly specialized elements of
a project. This could include software development work, marketing activities,
customer service roles, cleaning or security services and more.

There are many reasons why companies decide to outsource skilled activities
and this is a common practice among big, small, and medium-sized
companies; where outsourcing is sometimes the only option to get things
done.

Some of the main reasons businesses outsource skills or products

may include:
 The inability to develop the product or obtain the service in-house
 The need to reduce costs.
 The goal of expanding capacity
 The short-term need for staff or product
 The need for specialized and scarce resources.

Some of the Benefits of Outsourcing are:

 Cost Savings: Outsourcing activities normally reduce costs as you don’t
need to invest in extra software, hiring costs, and direct costs related to
having employees and their benefits.
 Time Savings: By outsourcing tasks, things can get done quicker and
more efficiently.
 Flexibility: Since the resources are external, you can bring them based
on your specific needs, for the time you just need them (even for short
periods of time)
 Higher Efficiency: Outsourcing non-fundamental activities to external
resources allows you to focus on your core business activities.
 Access to Scarce talent: Having access to talent that can be scarce or
very expensive is an advantage when outsourcing. For example, for US
companies, outsourcing your software development needs is a
common practice with multiple benefits, especially when it is done in a

https://www.proximitycr.com | Phone USA: 1 (716) 226-0031 | email:info@proximitycr.com

 Nearshore model to countries like Costa Rica, that is very close to the
US, works in a similar time zone, have a strong alignment in terms of the
business culture and the way they do business, while having the benefit
of a lower cost for highly talented resources.

How does it work?

Outsourcing is a strategy that companies use to improve their
competitiveness, but in many cases, the company knows they need help but
they are not sure about what. It is here when it is key to clearly define what
needs to be done, what are the skills and knowledge needed, and the
specific requirements that the company has for the work to be done
(technology uses, tools, methodology, etc).

Choosing the right outsourcing partner can be a challenge and the best
approach is to first define the final result and your expectations of the
outsourcing relationship.

Before choosing an outsource partner, ask the following questions.

● Does the selected offshore partner have experience in the particular
service that you want to outsource?

● Has your selected outsourcing service provider been able to provide

quality services to other companies like yours?

● Does your chosen business partner use the best in technology, software
and infrastructure?

● Does your outsourcing provider have experienced, trained and

qualified professionals that can efficiently handle your projects?

Asking these questions and validating the responses you get from multiple
potential providers will help you to make the best decision.

https://www.proximitycr.com | Phone USA: 1 (716) 226-0031 | email:info@proximitycr.com

Once you have chosen your partner:
As important as choosing the right partner, creating the right business
relationship is equally key. Once your decision is made, make sure you work
on the following aspects:

1. Establish open communication and a close relationship: Whether in

person or through video conferencing tools, it’s important for you
and your new business partner to see and hear each other.
Arranging visits to the offshore office to meet the people you’ve
partnered with, and the employees carrying out your tasks can
make a huge difference in the results.

2. Define business roles and responsibilities: Discuss partnership details

like budget allocations, goals, and other plans in the future. You
must also define the business roles to let both companies
understand the extent of their responsibilities, and streamline work
processes.

3. Define the success criteria: Make sure all parties involved are on the
same page in terms of expectations and the way success will be
measured and aligning your goals.

4. Create an environment based on trust: Establish a healthy

relationship based on trust. You can need to have a balance where
you keep an eye on your partner while providing a healthy distance
to give it enough legroom to grow, innovate, and exceed your
expectations.

https://www.proximitycr.com | Phone USA: 1 (716) 226-0031 | email:info@proximitycr.com