It’s easy to assume that outsourcing is used by smaller companies as opposed to large, high-performing companies. Surely larger companies have a huge staff on the payroll that they can call upon? This is not always the case, and many outsourcing examples from some of the biggest and most disruptive companies in the world show that the big players can take advantage of the strategy of staff outsourcing.
There are a number of types of outsourcing, too. Some people think that outsourcing is just for menial tasks or to gain access to a huge pool of staff for customer support or customer service. Outsourcing is fantastic for fast-expanding companies, but it can also be a way to access the best talent. Contractors and freelancers in certain industries specialize in working on shorter projects, for instance. It might make more sense for a company to work with freelancers rather than take on the responsibility of full-time employees.
In this guide, we’re looking at some incredibly high-performing companies that are known to use outsourcing. We also evaluate what you can learn from outsourcing companies. Most business owners will be confronted with the option to either employ or to outsource at some stage, so what can you learn from the way other companies have approached things?
What is Outsourcing?
Before delving into the list of companies who outsource, you should make sure to fully understand the term.
Outsourcing is the contracting of part of a business’s processes or “value chain” to an external third-party provider. Usually, they will perform tasks in the name of the business. Examples include outsourcing customer service or support to a virtual receptionist service. Another example would be making use of someone’s expertise on a short-term basis rather than having to hire a full-time employee.
Web developers offer some of the most commonly outsourced skills. Most companies need a web developer to work on one specific project and then move on. A full-time hire would make no sense.
Outsourcing might also be a way to simplify and make things easier for a company. You might hear the term “BPO,” which stands for business process outsourcing. Often, this involves simple tasks such as answering the phones 24/7 or data entry being passed on to an external company. There are a number of reasons for outsourcing:
As you can imagine, outsourcing is an option for a small lifestyle business, or, as covered in this article, a large multinational corporation.
Major Companies That Outsource: Top 5 Examples
It’s hard to think of such a massive company needing to outsource. WhatsApp would eventually sell to Facebook for $19 billion. To get to this level, they made smart use of outsourcing as the company grew.
Back in 2012, WhatsApp had only 35 employees and some of these weren’t even full-time. To “bootstrap” and keep the costs of their growth down, they outsourced a lot of their development. WhatsApp is one of the fascinating stories of how outsourcing can become part of the company’s identity, as eventually they hired some of these outsourced staff as full-time employees. Until recently, some of the company’s advertisements searching for freelancers were still visible online.
The graph below shows what happened to the company after 2012:
WhatsApp’s outsourcing used both the expertise of freelancers and clever cost-cutting techniques. Rather than having to pay for developers local to Silicon Valley, they were able to save with remote professionals who would prove that their skills were up to the task. The lesson to take from this is that highly-skilled providers of computer programming and web development don’t live only in the Bay Area.
If you’re looking for examples of huge companies that use third-party providers, they don’t come much bigger than Google. The company is known to use highly-skilled freelancers, but also makes use of business process outsourcing. In 2011, Google was already worth billions of dollars when they chose to outsource and take advantage of outside workforces. Customer support reps were taken on as part of an outsourced service, and these dealt with both phone calls and emails.
It shows just how effective BPO can be. A company as massive as Google was willing to outsource, confident that their reputation would be in safe hands. Working hard to create a phone call script and guidelines for customer service staff can be just as effective whether you are making use of third-party expertise or the workforce in your own office.
The lesson to take from seeing Google outsource is that the decision to use an external service provider might be a wise one, no matter how large a company you are running.
Whether you know about it or not, chances are something you own was sourced on Alibaba. It is one of the largest wholesale platforms in the world. Founder Jack Ma started the business from China and this is a fascinating example of outsourcing to the west, something we usually don’t consider.
In a book about “the inside track on Alibaba,” outsourcing is focused on in detail. Ma hired remote workers in the US., which allowed the Asian company to grow massively here and then in the rest of the world.
The lesson here? Outsourcing can drive growth. By hiring staff with a better understanding of markets you wish to break into, or even better communication skills, you can utilize outsourcing to quickly reach new territories. You don’t need to open a new office to embrace staff in new locations.
MySQL might not be as big in terms of brand recognition as some of the other companies we’ve mentioned on this list. However, they provide a truly vital service and are the kings of database technology used for websites, app development and more.
The first release of MySQL was more than 20 years ago. It has grown an incredible amount since then and releases its source code under the GNU license, meaning it is widely available. Outsourcing was a big part of the company from the beginning.
Servers running on the platform are utilized by:
… So you can see what a huge and influential project this was. Managing freelancers properly means that even in multiple locations, the process can be beneficial and lead to the growth of your business.
The Most Popular Reasons For Outsourcing
Outsourcing has been popular for decades, but cutting costs is no longer the main reason for people outsourcing. This shows a fascinating shift in the way people do business.
An IBM study on the benefits of outsourcing found that “only 27% of companies outsource to cut costs,” which challenges the perception many people have that it is all about getting cheap labor. The study continues to say, “36% are innovators and 37% are growth-seekers, using outsourcing as one of their tools to optimize their businesses.”
Outsourcing is not just about getting the same job done cheaper, it is about getting the job done better. It makes sense. A growing company can hire staff to man the phones, and invest time and money coming up with a system to deal with customer service, or the same company can work with a service provider specializing in this, such as Nexa.
We can work with you to create an effective script, and fully-trained professional virtual receptionists can integrate with your CRM and business systems. Saving money might well be a benefit, especially if you avoid taking on full-time staff. But it is the skill and expertise of our virtual receptionists that is the true selling point.
Frequently Asked Questions
How do you outsource to a third-party company?
If you are looking to outsource a whole area of your business, finding a business process outsourcing company can be a challenge. It is a good idea to draw up a shortlist by finding recommended companies or searching for companies specializing in what you need, from data entry to call handling. An external company is likely to have a number of clients already and can walk you through the process of using their services. Don’t get tied into a long-term contract until you are certain about them.
Where can we find freelancers?
Some outsourcing may involve finding individual freelancers. If you need a web designer, for example. You can always ask for referrals and recommendations, or reverse engineer the end result. For instance, you can find local companies with websites you like and see who is credited with the design. This reverse engineering works in most industries and freelance skill sets. If you still need to find freelancers, you can make use of job boards and communities such as Upwork or Freelancer.com.
Are there disadvantages to outsourcing?
Outsourcing doesn’t come totally free of any risks or downsides. It is possible that you could lose talent to a better offer, or a job might not get completed to your satisfaction. Contracts are vital for ensuring you are protected in this way. It’s important to cultivate trust so that you don’t lose out on quality control, or get let down by freelancers or service providers. There are advantages and disadvantages for each business to consider.