Becoming Profitable

The Meteoric Rise Of Outsourcing

By January 24th, 2017 No Comments

Outsourcing might seem like a relatively new thing. If you’ve got a small creative agency, you may have only thought about it in terms of big multinational corporations. But ‘outsourcing’ is nothing new – in fact, it’s been around for hundreds of years, and it’s a process which is useful to businesses big and small.

We’ll be sharing a series of blogs on outsourcing – most importantly, how you can implement it to save time and effort in your own creative agency, no matter what size – so we’ll start here with a bit of history.

Note, if you find this a bit dry, feel free to move on to one of our other outsourcing posts.  This one is for those of you who like a bit of dates and history!

Outsourcing from the 1700’s

From as early as the 1700’s, when Adam Smith published his great work ‘The Wealth of Nations,’ outsourcing has been an essential business practice, as nations and businesses manufactured goods in areas where the cheapest labour was available.

But outsourcing has become more of a business strategy in 1989, when, following the diversification of many companies in the 1960s and 70s in order to protect profits and spread risk, businesses found that their managerial structures were wasteful and bloated. So they began to shift non critical (or “non core”) processes to third parties.

In the 1990s, outsourcing really caught on.  Offshoring became key, while large companies took advantage of cheaper labour costs and lower costs of living to move production overseas and save money for their business. With globalisation, it made sense to offshore those more mundane tasks.

As jobs continued to move overseas though, offshoring started to get a bad reputation.  Many saw it as something almost evil, a business practice that deprived local people of jobs.

At the turn of the century, something changed.

Global Connections Have Simplified Outsourcing

The explosion of the internet meant that businesses big and small could access information and services anywhere in the world.

Outsourcing no longer meant a formal, on-going and long standing relationship; it could be just a one-off supply need, a smaller part of a larger task.

The last ten years have seen a huge growth in the number of freelance outsourcing websites available, both specialist and generic, where you can find just about any service offered.

You can get web design or bookkeeping, computer programming or virtual personal assistance. Even the smallest of tasks can be ‘micro-outsourced’ to companies like Fiverr for just $5.  Tasks like getting logo colours changed or having a voice over recorded for a promo video.

If you can think of something you need, the chances are there will be someone online who is able – and willing, for not a lot of cash – to help.

Outsourcing has exploded in popularity (and will only continue to grow)

In 2013 alone, over 1.2 million jobs were posted solely on Elance, with earnings amounting to $285 million dollars in outsourcing revenue. That’s a lot of jobs and a lot of money, and shows why almost half a million new businesses signed up to use Elance last year, and why more and more freelancers are joining up to offer their services.

Four and a half million people in the UK are currently registered as self-employed, according to a recent report by The Independent, and many are entering the freelance world straight out of university, to offer their skills around the globe.

And as broadband accessibility expands, along with the continued development of file sharing facilities, data storage and secure online transactions, these figures will just keep on growing.

It’s Not All Overseas

Outsourcing jobs are not necessarily all about overseas outsourcing to countries like India or the USA either.

British based site People Per Hour saw over 70% of jobs go to contractors in the UK in 2013, as freelancers with specialist expertise continued to flood into the site to register their services. Manchester saw the highest number of new freelancers register in 2013, a 175% rise on the previous year.

The proliferation of these all encompassing outsourcing websites, like Elance, ODesk, and People Per Hour, mean that outsourcing now forms the basis of many strategic decisions in businesses, and is not just solely about cost or convenience.

Is Outsourcing For You?

No matter the size of your creative agency, you can get the expertise you don’t have and focus on what you’re good at, allowing you to grow and develop.  You’ll have the time and the money available to utilise the skills you do have in the most effective way.

Doesn’t that sound refreshing?

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