Why Do Companies Choose To Outsource Work?

Now that distributed workforces have become more commonplace, many companies are taking advantage of the benefits of outsourcing to lower costs and streamline operations. Here are a few reasons why they are outsourcing intellectual property (IP) tasks to specialist external partners, such as Questel.

Why do companies outsource? Here are three key reasons informing the decision-making of companies when choosing to outsource work:

Why do companies outsource?

1. Lower Costs to Increase Profit

Financial instability is a driving factor in decision-making around outsourcing. By outsourcing certain tasks, a business can reduce the overall costs of a process. The costs of conducting a process in-house can be higher, for example, if it requires temporary or permanent access to an expensive tool, specialist know-how, or any knowledge that requires a specialism in a particular field.

In addition, recruiting and retaining a team is expensive, especially in competitive markets. Studies have shown that it can cost a company six to nine months' salary to replace an employee, due to expenses associated with recruiting, onboarding, and training, as well as reduced productivity during the onboarding and transition stages. These costs and loss of productivity are at least partially negated when a company chooses to outsource these roles, since the supplier manages the HR costs.

2. Focus on Faster Growth

When a tool or process requires in-house integration, this can drain resources from other areas of the business, especially if it is not a core competency. In such cases, outsourcing specific IP administrative tasks to an established IP services provider enables the company to focus its internal resources on more beneficial areas.

When a company chooses to outsource work, it also opens itself up to faster growth potential. Access to larger teams with established resources is relatively rapid compared to onboarding internal teams, acquiring tools, and training those teams on tools and processes. By working with specialized providers, a business can access specialists and resources quickly at a lower cost and lower risk. For example, if your business wants to expand into a new market, outsourcing work to a trusted partner with specialist knowledge of the process or market can provide rapid access with local insights. It also prevents context switch for internal teams, so they aren't distracted from their key focus areas.

3. Fast Access to Specialist Tools

Tools built to simplify a process can be expensive and time-consuming to integrate into a business, especially when employees are not familiar with the tool and require remote training and supervision. If not properly integrated or if the right level of support isn't accounted for,any initial investment may be completely wasted.Many companies choose to outsource work that relies on tools that are expensive and time-consuming to integrate.

In many cases, it's more advantageous to outsource tool-specific work to an external partner who specializes in complex tools and develops them with an advanced support team. For example, if your business wants to expand into a new market, outsourcing market research to an external vendor can provide you with valuable data and local insights that would have otherwise not been accessible due to time and cost constraints. The same applies to IP docketing, document preparation, and other such time-consuming administrative tasks.

The market for business process outsourcing (BPO) is expected to reach $405.6 billion by 2027, rising at a CAGR of 8.0%, demonstrating that more and more companies are choosing to outsource work to save money, quickly access tools and resources, and scale their businesses more efficiently.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.