What is Outsourcing? The competitive battle between Outsource and Inhouse

Outsourcing is becoming more and more popular as companies grow and their needs start to become special, to the point where supplies for specific positions are not easily found in the national market. Furthermore, with the rise of the startup ecosystem, outsourcing has provided a way for founders and entrepreneurs to find top international tech talent at a significant discount to start up. their company or enhance their existing team.

“The main negative effect of outsourcing is that it increases US unemployment. The 14 million outsourced jobs are almost double the 7.5 million unemployed Americans.” as mentioned by Kimberly Amadeo from the Balance.

What is outsourcing?

In a word, outsourcing is defined as the activity of purchasing goods and services from a foreign supplier. This method is most commonly used in industries that lack labor for specific positions or where labor costs are too high. For example, a software developer or designer,

Companies can outsource any location. Today, however, we see companies using it for non-basic roles, whose function is to provide support for a company’s central infrastructure or support operations. company day.

Here are the predominant job sectors that companies outsource: 

  • Manufacturing 
  • IT Services 
  • R&D 
  • Distribution 
  • Call Centers

With the development of the technology field and the start-up ecosystem of outsourcing, it has become especially attractive. Even the market demand is more than the supply, leading to a shortage of personnel in outsourcing companies.

Why do companies outsource?

Companies should choose outsourcing because it reduces production and business costs, thereby increasing profit margins. And for an economic person, it is a reasonable strategy that does not require training resources but still ensures the quality of work.

According to Brandon Gaille, 46% of companies cite that the top reason for outsourcing is to reduce operating costs, with 12% wanting access to world-class capabilities. Here’s a thorough breakdown of the reasons why people outsource:

  • Business cost savings – 44%
  • Optimal use of outsourced human resources – 34%
  • Focus on core business – 31%
  • Improve your business with new services – 28%
  • Accelerate company growth – 22%
  • On schedule of the project – 15%
  • Learn technology experience from Outsource partners – 15%
  • Operational time savings – 9%

How does outsourcing work?

To answer this question thoroughly, we will have to dive into each of the different market segments. Within the scope of this article, Natuha Solution will refer to it from the point of view of a technology Outsourcing service provider

Technological software developers work with partners after learning with each other. Normally, a partner looking to Outsource service providers usually takes 3-6 months before deciding to work together.

Read more:

How to choose the right outsourcing strategy for your business?

Tips to Know When Outsource Mobile App Development in 2021

The process of cooperation between enterprises and software outsourcing companies

  • Define project requirements. Enterprises need to determine exactly what the end goal of the outsourced project is. Estimated cost and time to complete the project
  • Talk to your outsourcing partner about project requirements. Listen to the presentation and solution and the technology that HR intends to implement
  • Waiting to receive a quote from an outsourcing partner. Often outsourcing companies will be based on the goals of the project to divide into stages and receive costs after completing those stages.
  • Receive quotes, edit time and exchange confidential internal information…. before embarking on cooperation.
  • In the process of implementing projects, enterprises and software outsourcing companies must always connect regularly and meet daily to grasp the project progress.

The choice of outsourcing is cost-effective and effective for businesses a lot. However, it also encountered a lot of mixed opinions such as why not train in-house to implement the project but waste it on outsourcing. You can read the article Top benefits of outsourcing IT for more information

The competitive battle between Outsource and Inhouse

Contrary to Outsource – Inhouse is a form of implementing activities using internal personnel. The benefit of the Inhouse form is its own capital – what the business owns. When using the Inhouse form, businesses are always sure that they own the personnel, can communicate at any time…

However, Inhouse is a double-edged sword when the technology situation is developing day by day, focusing on developing the Inhouse team will spend too much time on finding and training personnel, leading to low project quality and efficiency. business results decline.

Choosing Outsource or Inhouse is a choice depending on the development and business strategy of the business. There are stages that need rapid development from Outsource, there will also be stages that need a smooth synergy from the Inhouse team. The best solution for competing with Outsource and Inhouse is timing.

Natuha Solution – is a professional software outsourcing company. With 8 years of working experience and professional competence recognized by customers. We are confident to be the best software outsourcing service provider. Bring satisfaction from product quality to service experience. Choose Natuha Solution to accompany you today

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