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What the Modern Small Business Owners Have to Understand about Outsourcing

outsourcing-servicesOutsourcing, as Investopedia explains, is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. Primarily, it is a strategy of finding cheaper means of getting tasks done through an outside source who is usually from a different geographical location. Thereby, freeing yourself and your people from the burden so you could concentrate your time and efforts on matters that are of higher importance to your business.

This is the premise that created new industries like the call center industry and the virtual assistance industry, which led to a new breed of professionals.

From a Virtual Assistant’s Point of View

Over a year ago, I couldn’t say that I fully understood the term outsourcing. I just knew that it is connected to the call center industry, as most of my friends ended up in it after graduation. This was probably the extent of my knowledge.

Friends keep talking me into joining them in this industry. I have always declined. You see, as a person, I am someone who would not get into something just because everybody else is in it. I like assurances first off as well as knowing what I’m getting myself into, plus I’m just not into the mob-mentality thing.

Then a year and four months ago, a friend told me about her job as a virtual assistant and convinced me to try it out. I was hesitant at first, but she said she believes this is something that I can do and will have no trouble learning. The reason I was apprehensive was I didn’t know much about the virtual assistant industry where she is from. I was afraid to be disappointed more than anything else. But, I thought what the heck, I should learn to take risks, sometimes.

To make a long story short, I applied, got accepted, and started out part-time. This was my introduction to the world of outsourcing. Now, over a year later of being a virtual assistant, I don’t regret the decision I made. In this short span of time, I have learned so much, not just about the industry but also a myriad other things.

The Rise of Outsourcing

Outsourcing is by no means a new concept as it has been practiced in business all these years. An example of that would be a manufacturing company “outsourcing” delivery trucks of a logistics company to deliver the goods to their outlets in various places where they are available. Another example is a company or establishment using a manpower agency in their locality to get people for specific jobs, instead of taking the time to hire one themselves.

However, outsourcing only became a well-known term when it was embraced by the digital world. The popularity of online marketing has changed the spectrum that outsourcing was operating in. The industries that flourished in its awakening in the virtual world has proved how helpful it could be. It also led to the creation of many jobs in different parts of the globe, particularly in Asia, changed the demographics of unemployment, and restructured how businesses should be conducted in these modern times.

The Drawbacks of Outsourcing

After all the years that outsourcing has been offering a lot of jobs to professionals and working to elevate online awareness, there is still some perceived drawbacks because of it. The first issue is that it takes away jobs from the country, since outsourcing companies tend to hire professionals from offshore countries.

Additionally, what worries experts is that if research and development (R&D) are outsourced, it could lead to serious effects on the nation’s own innovation. A recent study by the Center for European Economic Research shows that the process of outsourcing research and development might just be giving companies more complexities to handle. Using data culled from German companies, they figured that when companies outsource more than 15-30% of their innovation activities, management will encounter difficulty in maintaining the organization’s effectiveness.

On the other hand, US analysts think that there is a risk innovation and creativity will be eroded by the practice of outsourcing R&D to other countries. But, National Science Foundation (NSF) Science and Engineering Indicators say that 84.1% of R&D of US multinational companies are still done in the country. What the country really needs to be worried about instead is the dwindling that some countries like China, Korea, and Taiwan have higher research investment. That, plus the fact that they are having more turnout in professionals in fields of science and engineering. The reason why this is more of a cause for worry is that besides the lure of cheap labor, outsourcing as an industry is partly by the lack or low supply of a skills-set. So, if the country’s turnout of professionals in certain fields of study declines, this will further the need for outsourcing.

Outsourcing has been a big help to most modern small business owners. It is the industry that has gifted you with virtual assistants who make your lives easier everyday. A well-used strategy that was seldom understood fully from the benefits to the downsides. What many fail to see sometimes is that knowing the different effects it might create is as equally important as knowing how it can ease burdens. To understand both the boons and the banes of the industry will help improve it and develop it into an even more forward-thinking industry that can meet any challenge in the future.


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Angela is a virtual assistant specializing in content writing, social media marketing, and administrative assistance. Follow her on Google+.
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