How Outsourcing Labor Can Help Your Company Survive Labor Challenges

Companies deal with labor challenges all the time, but the last few years have presented some very unprecedented challenges that companies had to face and effectively deal with in order to survive. During the COVID-19 pandemic, there were steep job losses that pushed the unemployment rate to as high as 13%. A year later in 2021, over four million Americans left their jobs in an eight-month span, a time that is now referred to as “The Great Resignation” or “The Great Reshuffle.” The work environment itself also changed, with remote work, less in-person interaction between employees, and shrinking budgets becoming the norm during this time.

Many surviving companies are now evaluating their response to these events, what worked, what didn’t, and possible solutions to surviving if faced with similar labor shortages and challenges in the future. Most are finding that outsourcing is the best solution to surviving labor challenges. Here’s how.

What is outsourcing?

Before diving into what makes outsourcing a viable solution to labor challenges, we should first clearly define what it is. Outsourcing is the practice of hiring a third party on a contract or ongoing basis to handle a task, perform a service, or produce goods that had previously been the responsibility of the company’s own in-house staff. These hired out third parties can be both foreign and domestic. Functions like accounting, marketing, sales, IT, customer service, manufacturing, shipping and logistics, human resources, and certain administrative tasks can all be outsourced.

The main benefit of outsourcing is its cost savings. Having day-to-day tasks completed by employees working in a lower-cost economy where employment costs can be a fraction of the cost of a US-based employee. In addition to this, there is need for layoffs with outsourcing, and the practice connects companies with skilled and experienced staff quickly. Outsourcing also allows company leadership more time to focus on their human capital and more resources to be used on core business functions.

What makes outsourcing the solution to labor shortages?

When faced with a labor shortage, the main challenge most companies face is how they’ll be able to continue to deliver goods and services to their customers and clients smoothly. Outsourcing allows companies to do this without burdening internal resources.

Outsourcing connects companies with more qualified individuals who can be responsible for specific tasks that require their expertise compared to hiring in-house employees, and at a more affordable cost. This frees up existing in-house staff to focus on more core business functions and proprietary tasks, and it prevents them from getting distracted or bogged down by tedious day-to-day responsibilities because these have been outsourced. It also means more money and resources are available to ensure the smooth delivery of goods and resources.

The cost savings of outsourcing cannot be understated. Companies that outsource to third parties in foreign countries, like the Philippines, can save a significant amount of money and time compared to looking for a US-based employee to join their staff full-time. Outsourcing also saves companies money because they do not have to spend anything on sick leave, PTO, vacations, pensions, health insurance, and a variety of other responsibilities a company may have when hiring an in-house full-time employee.

Outsourcing is also a very flexible option for filling your labor needs, and it’s a scalable solution that can quickly adapt as your needs change. It’s a very efficient way to manage not just labor shortages, but year-round fluctuations in your staffing needs.

When an unexpected labor shortage hits, will your company be able to survive? Outsourcing ensures you won’t just survive in tough times but will thrive and grow to become stronger. Companies in almost every industry recognize the benefits outsourcing offers and how it enables them to keep their best employees for core business functions while relying on others to do the everyday tasks at a lower cost.