Much is made in politics and in the media of outsourcing. However, the word “outsourcing” alone tells us little about what is being outsourced. While most of us know that manufacturing work is outsourced, businesses big and small routinely outsource all kinds of corporate tasks when they can be done more efficiently or inexpensively overseas. Some prominent business minds, such as “lifestyle design” authority Timothy Ferris, contend that everything but a company’s core skill can be outsourced. While this is clearly not for everyone, it’s worth being aware of the most frequently outsourced business tasks in 2010. Here we explore twelve of these tasks with an eye toward why it often makes sense to outsource them.
One of the most routinely outsourced business tasks is customer support — particularly phone support. The cost of employing, providing office space and training, and paying taxes on American support reps can be quite high, whereas an outsourced call center in a country like India can frequently do the job for a fraction of the cost. Of course, the decision to outsource customer support is a trade-off. Internet forums and blogs are filled with overseas support horror stories about reps who speak broken English, fail to comprehend problems and make the entire support experience a grueling ordeal.
Accounting is a textbook example of a corporate task well-adapted to outsourcing because it involves a standardized methodology that professionals all over the world know. Overseas workers are routinely trained in American accounting practices, making it easy and convenient for American businesses to outsource their financial statements and other book keeping tasks. Given the sensitive nature of the work, however, it is important for businesses to ensure that they are working with competent and qualified teams.
Tax preparation, like accounting, is a paint by numbers activity following a standardized procedure that lends itself well to outsourcing. Given the pertinent financial records (receipts, ledgers, income statements, balance sheets, etc.), a trained outsourcing team can quite competently prepare a company’s tax returns for any given year. Like accounting, however, the legally important nature of tax preparation underscores the necessity of being selective regarding which teams you entrust outsourcing your taxes to. Failure to choose a capable team can result in errors whose consequences range from minor annoyances like interest and penalties to serious burdens, such as being audited.
Although web design is a more creative task than, say, accounting, it is a frequently outsourced task nevertheless. Overseas teams are often quite skilled in web design, and some providers even offer businesses their choice of ready-made website templates that the team can customize to their liking. However, not all web design jobs are appropriate for outsourcing. In general, outsourcing is preferable for standard corporate web design jobs for which time is of the essence. If your web design job requires significant creativity or innovation, it is probably best handled by an in-house designer who you can monitor throughout the project’s lifecycle.
Computer programming is commonly outsourced for similar reasons. A relatively standard programming project (like a message board, calculator, or database) can be quickly and easily completed by outsourced teams for pennies on the dollar in relation to what experienced American programmers would charge for the same work. But as Flowtown cautions in its article on disasters in outsourcing, programming is most intelligently outsourced for only such cookie-cutter tasks:
“An important project that will form the backbone of your entire company and requires ideas and knowledge that only the top executives at your company possess should not be outsourced, as the language barrier and supervising difficulty can lead to a sub-standard finished product. In-house workers who can be directly supervised and easily communicated with will get the job done faster and more efficiently than less-expensive off-shore workers.”
The outsourced task that gets by far the most media acclaim is manufacturing. Simply put, the U.S. economy has transitioned from being primarily a manufacturing economy to being primarily a service economy. In 2010, our economic strengths as a country lie in such things as financial services and telecom than in physically assembling products. Several reasons account for this trend, including the government costs (Social Security, Medicare, unemployment, etc.) of hiring Americans to the inescapably cheaper manufacturing labor available elsewhere. In any case, manufacturing is among the most frequently outsourced business tasks and figures to remain so for many years.
Routine data entry tasks (such as indexing, scanning, cataloging and order processing) are perfectly suited to outsourcing. A cost-conscious business can easily hire an outsourced team to perform just about any data entry project conceivable and — provided clear instructions and deadlines are given — get the job done with acceptable accuracy. About the only time a business should hesitate to outsource data entry is when the data involved is sensitive. Companies are understandably weary passing off customer data like credit card or Social Security numbers to outsourced teams. Such tasks notwithstanding, data entry is an ideal function to outsource.
Research & Development
All types of research and development projects are outsourced by today’s businesses. Everything from market research, customer demographics, financial research and even pharmaceutical research is handled by overseas teams trained in the various methodologies of each field. The most important task from the company’s standpoint is locating an outsourcing firm that specializes in the unique type of research needed for the project in question. Like any other field, different firms will specialize in different things. Be skeptical of hiring “one size fits all” firms that claim to be capable of doing any type of research you could possibly need.
While no one expects an outsourced legal team to defend their business in court, other types of legal services are handled adequately by overseas firms. Legal documentation, drafting/analysis, document review and litigation support are all examples of legal tasks that businesses confidently and profitably entrust to outsourced teams every single day. The ability to outsource legal services is especially advantageous to smaller businesses, which can seldom afford to hire American legal professionals at market rates. Large companies also frequently find it more efficient to use outsourced teams for routine legal tasks.
Another task that is increasingly being handed over to outsourced teams is creative services. Whether it’s full-length articles, logo design or advertising copy, overseas firms capable of completing such tasks are ready and waiting to assist your business. Perhaps the ideal situation in which to outsource creative tasks is when a temporary need arises, such that it makes little sense to hire a salaried employee. Outsourced firms are also cheaper than many American consultants, whose skills dictate higher market rates.
All types of administrative healthcare services are also profitably outsourced by American businesses, including medical billing and coding, medical transcription, teleradiology and healthcare software. As demand for sophisticated scanning and diagnostics rises, it becomes more lucrative to entrust such tasks with overseas teams that do quality work for less money than American medical professionals can command on the open market. A potential pitfall here (as with accounting and tax preparation) is that medical data is often sensitive by definition. This suggests that high emphasis must be placed on using only outsourced teams that have proven to be trustworthy and reliable.
Virtually any kind of engineering task – be it mechanical, electrical, structural or architectural – can be effectively and efficiently outsourced. This includes (but is not limited to) sketches, AutoCAD designs, modelling and consulting. Remember, however, the criteria for intelligently outsourcing web design and computer programming tasks, because it applies equally to engineering. When in doubt, it is best to outsource only standardized, paint-by-numbers projects that rely more on commonly known methods than on any unique vision you or your fellow executives uniquely possess.