10 Top reasons Why American Companies Outsource

February 16, 2024

Are you interested in outsourcing? Or are you stuck trying to figure out if the outsourcing route is for you? More importantly, do you want to stop wasting money on an in-house development team? If your answer is ‘yes,’ then you’ve come to the right place.

Here at Cloud Employee, we’ve seen immense improvement in our client’s operations in terms of workforce efficiency. This is all thanks to our professional offshore developers in the Philippines.

In this article, we’ll address some of the top reasons why companies in the United States ever so often opt for outsourcing. It further touches on several advantages of outsourcing, from reduced operational costs to increased work efficiency. To tie it all together, we'll provide you with insight into how outsourcing can improve your business’s chances of success.

1. Access to the latest technology

There’s no point investing vast sums of money in technology that you may never use more than once. Instead, you can outsource that business function to a vendor with access to the latest technology. American companies choose the outsourcing route because it offers access to some of the latest and most developed technology, without them having to spend a single dime purchasing it themselves.

Outsourcing IT companies typically subscribe to the latest tools, technology, and framework as these are necessary materials needed to execute their projects. US companies know this and take full advantage of it by outsourcing their IT development needs to outsourced vendors, thereby saving on tech costs.

2. Speedy and flexible labor

There are very few things American companies appreciate more than speed when executing tasks; that’s why outsourcing is a great fit. Speed matters a lot to businesses, especially when they don’t have much time on their hands, and they are in crucial stages of their operation. Let's say they are in the product development stage or product launch stage; time is of the essence.

Outsourced labor provides them with the speedy delivery they value, coupled with flexibility. This entails that businesses enjoy the benefit of having their outsourced partners work outside business hours. It also provides them with updates on the project and quality checks.

3. Reduced labor costs

The cost of hiring specialized, in-house labor is exceptionally high, and American companies recognize this. Because fewer labor costs free up resources to perform other business functions, companies in America opt to outsource. Hiring a flexible workforce, as opposed to hiring full-time in-house staff, included on the payroll regardless of services rendered, saves US companies a lot of money.

In addition to that, companies are aware that labor costs are significantly lower in some countries outside the US. So, they outsource their functions to vendors in those countries and successfully save more when it comes to labor costs.

4. Efficiency

One significant benefit of outsourcing is that it typically leads to increased efficiency when it comes to operations. Outsourcing the non-central functions of your business to external experts frees up time and resources so that you can focus on your core business functions. Besides, American companies know that the offshore vendors they outsource to are experts in their fields.

As such, they would be well equipped to execute their duties in a highly specialized and effective manner compared to an in-house team. Also, outsourcing saves businesses the time and costs of training and investing in in-house staff members.

5. Less material, shipping, and infrastructure costs

The same way it is with reduced labor costs, lower material, shipping, and infrastructure costs are among the top reasons why American companies outsource. Outsourcing allows businesses to minimize additional costs, such as shipping and material costs. For example, you can lower the amount of money you spend on operational materials by outsourcing some of your functions to offshore vendors. You see, the cost of those materials are often significantly less offshore in comparison to the US.

Also, businesses can save on shipping costs if the materials they need are readily available in the outsourced country. That will save on infrastructure costs as well since it'll become the outsourced partner's responsibility.

6. Increased customer satisfaction

By now, every business worth its salt knows that customer satisfaction is an integral aspect of success, and so they pursue it relentlessly. One advantage of outsourcing is the efficiency it brings, allowing your company to focus on core business functions. This can have a very positive and significant effect on how your customers feel about your products and services.

Increased efficiency means that you will be able to send out products and services quicker, and customers will appreciate that. It also means that you'll have time and resources freed up to focus on improving the quality of the products and services you deliver to your consumers.

You are also more likely to respond faster to customer complaints, and they can be tackled sooner. All of these contribute towards overall customer satisfaction, and it's all thanks to outsourcing.

7. Globalization

Globalization is one major benefit companies that outsource some of their functions enjoy. Outsourcing your business functions to overseas partners equally allows you to slowly but surely establish your company’s presence in international markets. Studies show that American companies owe about a third of their sales to international markets. In addition, outsourcing to the right location can present you with a time-zone advantage.

This means that your business could run almost 24 hours a day by strategically syncing your office hours. In turn, this can give you a competitive edge in your industry. Firms in the United States are aware of this benefit, leveraging it to establish new markets and remain competitive globally.

8. Access to professional procedures

If you want to end up with a good product, you need to rely on excellent procedures. If your goal is to execute an amazing project properly, you need to have the right people on your team; this can be achieved through outsourcing. Outsourcing allows you to partner with companies, teams, and vendors with established professional and effective procedures and processes.

You get to work alongside individuals that are professional and have developed well-defined project workflows, communication strategies, and engagement models due to years of experience. Also, you gain access to well-trained staff members that can adequately handle your project needs.

Even more, outsourcing to the right partner leads to faster product development and trusted development processes. Altogether, it'll put your business on the path to success.

9. Eliminate the stress of recruitment

Recruiting staff members can be a very long and stressful process. So why not eliminate it? Many recruitment managers admitted that the recruitment process, particularly when it comes to hiring IT staff, made them question their abilities at some point. This is when they have little to no IT background themselves.

With no IT knowledge, how do they know they are selecting the right candidate? This is a big reason why US companies choose to outsource. Partnering with a credible IT development company can take away the stress of finding the right candidates. For the most part, you can trust that they have highly skilled and experienced personnel in software development.

10. Risk management

Outsourcing helps businesses manage their risks in two significant ways. Firstly, when it comes to IT product development, outsourcing lessens the number of bugs the software product ends up with. More so, the product is less likely to crash as the outsourced partners have experts working on the software, and they'll be readily available to help in the event of a crisis. An outsourced team is also more likely to fine-tune your product, which is especially beneficial when launching a new product or service.

The other way outsourcing helps US companies manage their risks is by promoting continuity. Outsourcing certain functions and departments can help a company manage better during transitional periods, such as mergers or downsizing. As such, those aspects of your business will remain unchanged, plus the outsourcing partners will take on any risks that come with operations once they are in charge. In a nutshell, that takes some pressure off the business.

To Summarise

There is no doubt that there are risks involved when outsourcing functions of your business. However, most would say that the pros far outweigh the cons. Besides, with strategic planning, you can prepare yourself to outsource and significantly minimize any potential risks. Several American companies have mastered this, which is why they regularly enjoy the benefits that come with outsourcing some of their business functions.

Your company can also profit from outsourcing. All you need to do is plan ahead, set your goals, select the right outsourcing partner, and watch as your chances of experiencing success rise.  

We hope you found this article useful. Here at Cloud Employee, we assist companies looking to hire dedicated offshore developers across many technologies. Talk to us, learn more how Cloud Employee works, or see our Developer Pricing Guide.