Outsourcing vs. Delegation

20 years ago, businesses were all about embracing technology and globalization.

10 years ago, businesses were all about focusing on innovation and customer experience.

And in today’s business landscape efficiency and data are the name of the game.

Companies strive to optimize their operations, streamline processes, and maximize productivity to gain a competitive edge.

One key strategy to achieve these goals is finding the right balance between outsourcing and delegation.

Understanding the Difference Between Outsourcing & Delegation

These two terms are sometimes used as synonyms (which is wrong of course), so let’s explain it as simply as possible.

To not waste anyone’s time, outsourcing means hiring someone outside the company to do a task (a freelancer for example). On the other hand, delegation means giving a task to someone already in the company.

While both outsourcing and delegation can improve efficiency, understanding their distinctions is important for making decisions about how to utilize each strategy.

If you’re willing to learn more about when to use these strategies and for what, stay with us for a bit.

What Is Outsourcing?

As we said, outsourcing refers to the practice of assigning specific tasks to external partners such as freelancers or companies. Sometimes, that company could be specialized in the field of outsourcing. We call those companies outsourcing vendors or outsourcing providers.

So, instead of handling tasks in-house, companies contract with third-party providers who possess the necessary expertise and resources to perform the assigned responsibilities. This can include a wide range of activities, such as customer support, software development, content creation, or accounting services.

Benefits of outsourcing

There are numerous advantages of outsourcing for businesses, such as:

Cost savings: By outsourcing certain tasks, companies can often reduce expenses associated with hiring and training full-time employees, as well as overhead costs like office space and equipment.
Access to specialized expertise: Outsourcing lets companies hire experts from outside who specialize in specific tasks, benefiting from their experience and efficiency.
Increased flexibility: Outsourcing provides companies with the ability to scale resources up or down based on their needs.

Drawbacks of Outsourcing

While this strategy can bring numerous advantages, it’s important to be aware of the potential drawbacks of outsourcing:

Loss of control: When you outsource tasks to others, you give up control, which can make it hard to maintain quality, stick to company values, and communicate effectively.
Potential communication challenges: Outsourcing may introduce communication hurdles, especially if the external provider is located in a different time zone or there are language and cultural barriers.
Dependency on external parties: Relying heavily on outsourcing can result in a high degree of dependency on external providers (which of course brings a certain amount of risk).

What is Delegation?

If you’re a manager, you’ve probably heard about this one because it stands for one of the most critical management skills. Delegation involves assigning tasks, responsibilities, and decision-making authority to individuals within an organization.

Benefits of Delegation

Delegation offers several significant benefits for both managers and their teams:

Improved productivity: Delegating tasks allows managers to distribute workload effectively, preventing them from becoming overwhelmed and enabling them to focus on higher-level responsibilities.
Skill development: Delegation provides valuable learning opportunities for team members.
Improved teamwork and collaboration: Delegation promotes a collaborative work environment by encouraging teamwork and sharing of responsibilities.
Time management: Delegation allows managers to allocate their time more effectively.

Drawbacks of Delegation

While delegation can bring many benefits, it’s important to be aware of the potential drawbacks that can arise:

Lack of control: When tasks are delegated, there is a certain level of control that is relinquished by the delegator.
Potential for errors: Delegating tasks to others means that mistakes or errors can occur.
Dependency on others: Relying on others to complete delegated tasks can create a sense of dependency.
Misalignment of priorities: Delegated tasks may not always align perfectly with the priorities or goals of the delegator.

Choosing Between Outsourcing & Delegation

Weighing the Pros & Cons of Delegation

When deciding between outsourcing and delegation, it’s important to carefully consider the advantages and disadvantages of each approach we just mentioned. Evaluate factors such as cost, expertise, control, and communication to determine which option aligns best with your objectives.

Understanding the Unique Needs of Your Business

Every business is unique, with its own set of goals, resources, and constraints. So, unfortunately, we can’t give you an answer on which strategy to choose. Consider factors such as the nature of the task, the availability of in-house expertise, the importance of control and quality, and the potential impact on team dynamics.

Think about how each option aligns with your business’s overall strategy and long-term goals.

Considering a Hybrid Approach or Testing

Can’t choose which one to choose? No problem, just try both!

In some cases, a hybrid approach combining outsourcing and delegation may be the most suitable solution. This involves selectively outsourcing certain tasks while delegating others to internal team members. By finding the right balance, you can leverage external expertise where needed while maintaining control over critical functions.

Seeking Expert Advice If Uncertain

Don’t put pressure on yourself or your team members. It’s okay not to know something, but we’re here to learn, aren’t we?

If you find yourself uncertain about whether to outsource or delegate, it can be helpful to seek expert advice. Consider consulting with professionals who have experience in your industry or specialized consultants who can provide insights and guidance.

Best Practices for Effective Outsourcing and Delegation

We already mentioned a few things you should consider like evaluating factors such as cost, expertise, and control, defining clear objectives, etc. But there are still a few more things you can do to make these strategies more efficient. Let’s go through some of them!

Communicating Effectively

Effective communication is key to successful outsourcing and delegation. Maintain open lines of communication with external providers or team members, fostering regular and transparent dialogue. Regular communication ensures everyone remains on the same page and enables timely adjustments if needed.

Establishing Trust & Building Relationships

To build a successful partnership, you need to make sure to determine 100% compatibility with your BPO vendor. Building trust is essential for effective outsourcing and delegation. Establish a positive working relationship with external providers or team members based on mutual respect and trust.

Monitoring Progress & Providing Feedback

Trust and communication are good, but it’s even better if you can see the whole process with your eyes. Regularly review the work being done, assess whether it aligns with expectations, and provide constructive feedback as necessary.

Celebrate successes and go through challenges together. Timely feedback helps maintain quality, course-correct if needed and ensures continuous improvement throughout the outsourcing or delegation process.

Making Informed Decisions for Your Business

Let’s take a quick recap.When it comes to choosing between outsourcing and delegation, make your decision based on careful consideration or tasting. Go through the specific tasks or responsibilities at hand, evaluate the pros and cons, and assess the available resources and expertise. By weighing these factors, you can determine which approach will give you the best results and contribute to the overall success of your business.