How To Build An Outsourcing Strategy In 5 Steps + Examples

Businesses are in a never-ending race, trying to stay ahead of the competition, catch the latest market trends, and keep the cash flowing – all happening at once. While you strive to keep up with the business’s growing demands, there are a truckload of challenges staring you in the face. You have a great team but you also need the collective power of specialized talents from around the globe. This is where a great outsourcing strategy comes in handy.

Outsourcing is promising but it can actually get pretty tricky. Making sure you get the results you're aiming for while working with outsourcing companies depends on really knowing what's possible and what's not. You need to have a clear understanding of what tasks still belong to you and which ones you should delegate to them.

If you are new to this concept and looking to get your hands on it, our article is just what you need. Here, we will help you sculpt a great outsourcing strategy that is a sure-shot route to boost your company’s productivity and raise that ROI graph. Global talent awaits you. 

What Is An Outsourcing Strategy: A Quick Refresher

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An outsourcing strategy is a detailed plan to get some of your work done through partnering with external individuals or companies. Instead of doing everything in-house, you decide what business processes could be done more efficiently by others who specialize in those areas. These tasks might not be your expertise but are crucial for your business.

Imagine you are running a startup and have many things on your plate – from product development to marketing, customer service to financial management. It's a whirlwind of tasks and you're just one person. Here’s when you need to turn to strong outsourcing strategies!

A strategic outsourcing strategy is all about flexibility. It's not an all-or-nothing deal. You can outsource specific tasks or entire functions, depending on what makes sense for your business. 

When you outsource, you tap into expertise that might not be available in-house which gives you a competitive advantage over others. It is cost-effective too. Instead of hiring full-time employees for every role, you pay for the services you need when you need them.

5 Steps For Creating A Successful Outsourcing Strategy

We prepared a comprehensive guide that is a one-stop shop for all things outsourcing. It condenses all the important steps into a neat package and everything you need is right in there. So let’s take a detailed look at it.

Step 1: Define Your Goals & Needs

Before you start, get your ducks in a row. By ducks, we mean your business goals, needs, and even a few limitations. This step will set the coordinates for your outsourcing process and a whole lot of your success depends on how well you execute this one.

1.1. Assess Internal Capabilities & Limitations

Take a good, honest look at your in-house capabilities. What are you really good at? What could use a little boost? Maybe you've got an excellent marketing team but struggle to keep up with customer service operations. Identifying these strengths and weaknesses will help you target the right processes for outsourcing.

1.2. Assess Current Business Operations & Challenges

Now it's time for a bit of self-reflection. What are the pain points in your current business operations? Is there a specific process that seems to slow everything down? Pinpoint these bottlenecks – they're prime candidates for outsourcing.

Get down to the brass tacks. Take that list of operational pain points and start breaking them into smaller tasks or processes. Think about what tasks could be handled just as well or even better by an external outsourcing services provider. It could be data entry, payroll, IT support – you name it.

1.3. Set Clear Goals & Expectations

Outsourcing for the sake of outsourcing? That's not what we're aiming for. Set clear, measurable goals. Do you want to reduce response time in customer support by 30%? Cut down on software development costs by 20%? These goals give your outsourcing strategy direction and meaning.

1.4. Set Budget

Figure out how much you're willing to invest in this outsourcing venture. You don't want to be in over your head but you also want to have enough to make a meaningful impact. So tally up those dollars and cents and make sure you're not breaking the bank.

1.5. Create A Detailed Outsourcing Plan

Create a detailed outsourcing plan that provides instructions for your business strategy and operations. This plan spells out everything from A to Z. Clearly define the scope of the tasks you're outsourcing. Are you handing over just a slice of the pie or the whole thing? 

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Outline the deliverables – what's the quality and quantity you're expecting? Set a realistic timeline – business process outsourcing isn't magic; it takes time to set up and get the gears turning. This document will not only prove handy for your current needs but also provide a roadmap for future outsourcing contracts.

Step 2: Choose The Right Outsourcing Model

Having the right outsourcing model can directly impact your operations, efficiency, and ultimately, your profits. Different models offer different benefits. All you have to do is to dig a bit deeper into each model and then match them with the goals you set in the first step.

Let’s make it easy for you. We’ll discuss 3 major outsourcing models to give you a clear picture of what each has to offer and figure out the perfect match.

2.1. Onshore Outsourcing

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Imagine you're sitting in your office, sipping on your favorite coffee blend and discussing business strategies with a team that's located, well, across the town. That's onshore outsourcing for you. This approach involves partnering with outsourcing companies within your own country. No time zone issues, no language barriers, and you're still benefiting from external expertise.

When To Consider Onshore

• If the nature of your business requires compliance with strict regulations that are specific to your country.
• If communication barriers are a major concern and you prefer a shared language and cultural understanding.
• If you want to keep a close eye on your outsourced team and collaborate in real-time without worrying about time differences.

2.2. Offshore Outsourcing

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Offshore outsourcing is partnering with a service provider in a different country, often one with a lower cost of living. This can save you big while still accessing the best talent. Think of it as expanding your team's reach to a global scale. Yes, you might have to deal with time zone challenges and perhaps some language nuances but the potential benefits can be substantial.

When To Consider Offshore

• If your business operates in multiple time zones and requires round-the-clock productivity.
• If you're in a market where specific skills are scarce locally but you can find qualified professionals elsewhere.
• If you're looking to cut costs while maintaining quality as labor expenses will be lower in the outsourcing destination.

2.3. Nearshore Outsourcing

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Now let's find the middle ground. Nearshore outsourcing is when you collaborate with a service provider in a neighboring or nearby country. This gives you a balance between proximity and cost-effectiveness. While there might still be some time zone differences and potentially slight language variations, they are usually easier to manage compared to offshore outsourcing.

When To Consider Nearshore

• If you want to explore new markets or extend your business reach to adjacent regions.
• If you're looking to hire talent that has similar skill sets and cultural understanding because of geographic proximity.
• If you want a balance between cost savings and close collaboration without the extreme time zone differences of offshore outsourcing.

Step 3: Select The Right Outsourcing Partner

Selecting the right outsourcing partner is about more than just checking boxes. It's about finding someone who complements your internal business processes, understands your company culture, and can help you optimize those processes. 

Here’s how you can make sure that you're picking a partner that's a good fit for the long run.

3.1. Researching Potential Outsourcing Providers

Start by looking into different outsourcing firms or third-party companies that specialize in the services you're looking to outsource. Check out the online platforms, industry forums, and directories. Google is your gateway but Catena, Upwork, and Freelancer are the ones that you should consider first.

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The power of word-of-mouth is unmatched. Reach out to your professional network – colleagues, mentors, peers – and ask for recommendations. This initial phase is all about casting a wide net. The larger your candidate pool, the more informed your decision will be later on.

3.2. Evaluating Expertise, Experience, & References

Now that you have a list of potential partners, it's time to dig deeper. Look into their expertise and experience. Have they been in the business long enough to understand the ins and outs of the processes you're looking to outsource? Check out their track record – successful projects, satisfied clients, and maybe even awards or recognition in their field.

References are golden. Reach out to companies who've worked with your potential outsourcing partners before. Ask them about their experiences – the good, the bad, and the surprising. It will tell you what you are signing up for.

3.3. Ensuring Cultural Compatibility & Communication Capabilities

Remember, you're not just outsourcing tasks – you're partnering with another company. This means your cultures need to gel well. Look into the values, work ethics, and business practices of the potential outsourcing company. If your company is all about innovation and quick decision-making, partnering with an overly bureaucratic firm will be a mismatch.

Make sure the potential outsourcing provider can communicate effectively and clearly. You don't want misunderstandings and miscommunications causing hiccups in your projects. Don't be afraid to test their communication skills during your interactions – it's a litmus test for how well you'll work together when the real projects start.

Step 4: Implement & Manage The Outsourcing Strategy

This step is where your well-thought-out plan starts taking shape in the real world. It's about blending the outsourcing company smoothly into your existing ecosystem. Let's break it down into 3 important sub-steps:

4.1. Ensure Knowledge Transfer & Training

Identify what knowledge is critical for them. This could range from understanding your company's culture and values to specific project-related details.

Create detailed training materials, conduct workshops, or even arrange shadowing sessions where your in-house experts work side by side with the outsourced team. Encourage an interactive learning environment where questions are welcomed and clarifications are made.

4.2. Set Up Necessary Infrastructure & Tools

Identify the tools and software your outsourced team will need. This could be:

• Data-sharing tools like Google Drive and Dropbox
• Project management software like Trello, Asana, or Jira
• Communication platforms like Slack and Microsoft Teams

Keep these tools and software updated to ensure they stay effective and secure. Regularly assess whether they're meeting the needs of both your in-house and outsourced teams.

Consider data security too – establish access controls to protect sensitive information while ensuring that the outsourced team can collaborate effectively.

4.3. Ensure Alignment Between In-House Teams & Outsourced Partners

Set up regular meetings to discuss progress, challenges, and goals. Create channels for instant communication – whether it's email, messaging apps, or video conferencing platforms. Define roles and responsibilities clearly to avoid confusion.

Alignment isn't just about task coordination; it's about shared objectives and understanding. Help both your in-house and outsourced teams see the bigger picture and how their efforts contribute to the overall success of the company.

Step 5: Monitor, Evaluate, & Optimize

This step is where we roll up our sleeves and make sure that our outsourcing efforts are not only paying off but also continuously improving. Let’s discuss how you can achieve this. 

5.1. Establish Performance Metrics & KPIs

To truly gauge the effectiveness of your outsourcing strategy, you need to have performance metrics and KPIs in place that tell you how well things are going. For instance, if you outsource your customer support, your KPIs should include response time, customer satisfaction ratings, and resolution rates. 

If it's about software development, you should track project completion time, bug fix rates, and code quality. The idea is to align these metrics with your initial objectives so that you have a clear picture of whether you're getting the outcomes you wanted.

5.2. Regularly Trace & Assess Outcomes

It's not a "set it and forget it" deal. You should regularly track and assess how things are unfolding. This could be as simple as weekly or monthly reviews, depending on the nature of your outsourcing engagement. When you compare actual performance against your established metrics and KPIs, you can identify trends, spot any deviations, and understand whether you're meeting your goals.

These assessments are also a chance to have open communication with your outsourcing partner. Discuss what's working well, areas that need improvement, and any changes in your business environment that might impact the outsourcing arrangement.

5.3. Address Any Issues Or Deviations Promptly

In the world of outsourcing, as in life, things might not always go as planned and that's okay. The key here is to tackle issues head-on and as soon as they arise. If you notice a dip in performance or a deviation from the agreed-upon standards, don't wait around hoping it will magically improve.

‍Reach out to your outsourcing partner, share your concerns, and work together to find solutions. The sooner you address these issues, the smoother your outsourcing journey will be. Remember, it's a partnership and both sides should be invested in making it work.

5.4. Continuously Optimize The Outsourcing Strategy

Your outsourcing strategy isn't etched in stone. It's a dynamic process that should evolve based on your experiences and changing business landscape. Analyze the data and insights you have collected to identify areas where you can do even better.

This could mean tweaking your processes, adjusting your KPIs, exploring new technologies, or even rethinking the scope of your outsourcing. The idea is to never settle for "good enough." Strive for excellence and be open to innovation and adaptation.

11 Examples Of Having The Right Outsourcing Strategy In Place

Let's discuss 11 examples that show how having the right outsourcing strategy can help companies optimize business processes.

I. IT Services

Imagine a startup that needs to maintain its complex IT infrastructure. Instead of hiring a full in-house IT team, they outsource their IT services to a specialized firm. This way, they can tap into the expertise of professionals who specialize in IT maintenance while also reducing the costs associated with hiring and training large IT staff.

II. Customer Support

Many large corporations outsource their customer support to call centers in different countries. This not only reduces labor costs but also provides 24/7 customer service coverage because of time zone differences. This gives them a dedicated team available to address customer queries and concerns around the clock.

III. Manufacturing

Think about a fashion brand that designs clothing but doesn't own its own production facilities. Instead, they outsource the manufacturing process to third-party factories. This lets the brand focus on design and marketing while the manufacturing experts handle the actual production efficiently.

IV. Content Creation

Let's say a marketing agency needs a constant stream of blog posts and social media content. Instead of hiring multiple full-time writers, they outsource content creation to freelance writers or specialized content virtual assistants. This way, they get diverse perspectives and a steady flow of content without the overhead of hiring additional staff.

V. Payroll Processing

Consider a medium-sized business with a complex payroll structure. Rather than handling complex tax regulations themselves, they can hire a virtual assistant. This guarantees timely and accurate payments to employees without getting entangled in payroll calculations.

VI. Data Entry & Management

Picture a company dealing with heaps of customer data that needs organization. They can outsource data entry and management tasks. A data entry virtual assistant can ensure that information is organized and easily accessible without overloading the in-house team.

VII. Research & Development

Even big corporations sometimes outsource parts of their research and development projects. Let's say a pharmaceutical company wants to explore a new drug molecule. They collaborate with external research institutions to leverage their expertise in a specific area while sharing the risks and costs of development.

VIII. Human Resources (HR)

Many companies, especially small businesses, outsource their HR functions. This includes tasks like recruitment, payroll processing, and employee benefits management. It's like having an HR department on call, minus the HR department setup costs.

IX. Bookkeeping & Accounting

Think about a small business owner who isn't exactly a numbers guru. They can outsource their bookkeeping and accounting tasks to professionals. This way, they're not stuck deciphering spreadsheets and they ensure their financial records are accurate and tax-compliant.

X. Market Research

A marketing team is launching a new product. Rather than diverting their energy into extensive market research, they can hire a research virtual assistant. This way, they get valuable insights into consumer preferences and trends without taking focus away from product development.

XI. Administrative Tasks

Let's consider a founder of a Fintech startup. This founder has an incredibly demanding schedule. To share some of his workload, the founder decides to outsource tasks to an executive assistant. The assistant takes charge of the CEO's calendar, scheduling meetings, conferences, and appointments in a way that maximizes efficiency and minimizes conflicts.

Why You Should Make Catena A Part Of Your Outsourcing Strategy?

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At Catena, we understand that startups are all about juggling a thousand things at once – from refining your product to managing your team and keeping the ship sailing smoothly. Our executive assistants know this all too well and are trained to take charge from the word go. 

When we say we hire the top 1% of talent, we really mean it. Our rigorous selection process ensures that only the most skilled and dedicated EAs join our team. With over 100 CEOs served, our executive assistants have handled the chaos of board meetings and event planning and mastered the art of keeping CEOs on top of their game. 

Our executive assistants are from the Philippines so they naturally possess strong work ethics and excellent English language skills. Hiring an executive assistant through Catena isn't just about saving dollars; it's about smart spending. You get expert assistance at a fraction of the cost of hiring an in-house resource. How? We tap into the brilliance of university graduates who bring their A-game without breaking the bank.

Conclusion

A great outsourcing strategy gives you a way out of ineffective sticky situations by cutting costs, increasing efficiency, and accomplishing specialized tasks. But there are certain preliminaries you should follow – internal readiness assessments to ensure that it will benefit your organization in many ways. 

That's where we come in. At Catena, we understand that outsourcing isn't just a buzzword; it's a strategic move that needs careful planning. Our team specializes in finding the perfect executive assistants who can seamlessly join your efforts and supercharge your operations.

Ready to dive in? Let's have a chat and figure out how Catena's executive assistants can be the magic ingredient that takes your outsourcing strategy to the next level. Book a consultation today and explore the possibilities.

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