7 outsourcing examples for rapid growth and success

Outsourcing internal tasks to external professionals can help you improve efficiency, cut costs, and scale your business. Partnering with solutions like an Administrative Services Organization (ASO), for example, can enable your business to streamline operations and focus on strategic expansion, while experts manage specialized and time-consuming tasks.

In this article, we explain what outsourcing is, share outsourcing examples, and discuss when it may be the right time for your business to consider this approach.

What is outsourcing?

Outsourcing is the process of hiring external companies or professionals to handle specific tasks or services typically managed in-house. This strategy plays a significant role in business operations by allowing companies to delegate certain functions to outsourcing companies while they maintain a focus on their primary growth objectives.

Some of the most commonly outsourced business functions can include human resources, payroll, IT support, and customer service. Ultimately, business process outsourcing allows companies to manage various organizational functions more efficiently without hiring and training new employees.

It’s important to distinguish between outsourcing and offshoring. Outsourcing involves contracting third parties, regardless of location, to manage tasks like HR or customer service. Offshoring, on the other hand, refers to relocating entire business processes to another country but still managing them internally, such as setting up a company-run call center abroad.

An example of outsourcing: A tech startup develops a new app and contracts its information technology (IT) support to a specialized firm. This allows the startup to resolve technical issues quickly, such as server outages or software bugs, without diverting their internal team from critical tasks like coding and user experience design. By outsourcing IT tasks to experts, the startup can maintain momentum in product development and deliver a smoother app experience to its users.

7 top outsourcing examples in business

Business process outsourcing has become a fundamental strategy for companies looking to streamline operations and focus on core business objectives. Here are some of the top examples of outsourcing that illustrate how your businesses can leverage external expertise to enhance efficiency and effectiveness:

1. Payroll

Payroll outsourcing allows you to delegate the complex and time-consuming task of managing employee compensation to specialized payroll providers. This can include calculating wages, withholding taxes, and monitoring compliance.

Example of outsourcing payroll: A healthcare company expanding globally partners with a global payroll provider to streamline payroll for its employees in the US, UK, and Australia. The payroll provider handles payments in local currencies, accurate tax filings, and compliance with local labor laws.

With Rippling's fully customizable payroll solution built on a unified record of employee data, you can run payroll in minutes—so your teams can focus on other priorities. With a 100% error-free guarantee, global compliance automation, and endless configurability, Rippling offers an end-to-end solution for streamlining payroll processes across multiple regions. It also allows you to track spending alongside payroll across different attributes, including location and function.

2. IT support and management

Outsourcing services, like IT support and management, can allow your business to hand over the maintenance and troubleshooting of your technology infrastructure to experts. This can include an outsourcing company managing your software, hardware, networks, and cybersecurity.

Example of outsourcing IT support and management: A growing e-commerce company delegates the setup and security of devices for remote employees to external experts. These external experts manage everything from its software updates to network security, allowing the e-commerce business to focus on expanding its product offerings without worrying about tech issues.

Powered by a single source of truth, Rippling’s IT management solution allows you to unlock total visibility and control over identity, devices, and inventory across the user lifecycle. With Rippling, you can set up and manage devices, apps, and security in just minutes, no matter where your team works.

3. Customer service 

Outsourcing customer service allows you to delegate support tasks like answering inquiries and resolving customer issues. This can help your business handle higher volumes of customer interactions without overloading your internal resources.

Example of outsourcing customer service: A growing online retailer struggling to manage increasing customer inquiries during peak shopping seasons may outsource its customer service to a specialized provider that can take care of phone, chat, and email support. This can help the online retailer quickly scale support, reduce waiting times, and improve customer satisfaction, while allowing them to focus on product fulfillment and business growth.

4. Human resources and recruitment

Outsourcing human resources and recruitment allows you to delegate key business processes like employee onboarding, benefits administration, and talent acquisition to external experts. This can reduce the time and costs associated with managing HR functions internally while monitoring compliance with labor laws, accurate payroll processing, and efficient workforce management.

Example of outsourcing HR and recruitment: A rapidly growing mid-sized company delegates core HR and workforce planning functions to an external provider after struggling to keep up with increasing demands. By outsourcing these processes, the company can quickly fill open positions with top talent, onboard new hires within days instead of weeks, and efficiently manage benefits like health insurance and 401(k) plans.

With Rippling’s HCM you can easily automate every step of the employee lifecycle, from onboarding and benefits enrollment to transitions, promotions, and offboarding—all in one unified platform. It empowers employees to access the resources they need, gives you on-demand access to data for better workforce management decisions, and helps your business stay compliant. 

5. Marketing and lead generation

By outsourcing marketing and lead generation, you can free up time and resources for strategic organizational growth while an outsourcing company works on attracting new customers to your business. 

Example of outsourcing marketing and lead generation: A SaaS company struggling to generate enough qualified leads for its new product launch decides to outsource the creation of targeted LinkedIn and Google Ads campaigns aimed at its ideal customer segments. This can help the company increase the amount of qualified leads it gets so it can boost product signups and drive growth.

6. Web and software development

By outsourcing your website and software development, you can meet these business needs without the expense of building a specialized in-house team. Software and web development outsourcing companies can provide expert developers who can handle projects like website creation or custom app development, helping you reduce costs while improving speed to market.

Example of outsourcing software development: After facing high costs and long timelines when trying to build an internal team, a FinTech company outsources development of a mobile banking app to a specialized firm that can quickly build and test the software. This reduces costs and speeds up the launch, allowing the company to release the app ahead of competitors and capture early users.

7. Logistics and supply chain management

You can address complex operational challenges without an in-house team by outsourcing logistics and supply chain management. Outsourcing companies in this arena can take on tasks such as inventory management, shipping logistics, and supplier coordination, helping you improve cost-efficiency and enhance delivery times.

Example of outsourcing logistics and supply chain management: An online retailer partners with a specialized provider to handle logistics after struggling with delayed shipments and inventory discrepancies. The outsourcing provider streamlines warehouse management, optimizes shipping routes, and ensures faster deliveries, reducing costs and improving customer satisfaction.

Benefits of outsourcing

Business outsourcing services offer several advantages that can significantly enhance your organization’s operations. Below are some specific benefits, along with examples of outsourcing that show the tangible impact:

Cost savings

Outsourcing can help you reduce expenses by eliminating the need to hire full-time staff for specific roles. This can lower overhead costs, streamline operations, and allow you to allocate resources more efficiently.

For example, a retail company struggling to manage a surge in customer inquiries may outsource its customer service to an offshore team instead of hiring in-house representatives. This approach can allow the company to save on salaries, benefits, and office space while still maintaining quality customer support.

Access to specialized expertise

With outsourcing, you can gain direct access to specialized expertise that’s difficult or expensive to build in-house. It can help you fill skills gaps and overcome workforce challenges without the time-consuming and costly process of hiring and training talent.

For example, a software development company needing stronger app security may outsource cybersecurity to a specialized firm so it can focus on its core operations while improving both security and competitiveness.

Scalability and flexibility

Outsourcing allows your business to scale operations up or down as needed, offering flexibility without long-term commitments. It can help you handle fluctuating workloads or seasonal demands without the pressure of hiring permanent staff. 

For example, an e-commerce company facing high demand during the holiday season may outsource additional warehouse and fulfillment services. This flexibility allows the company to manage the surge in orders efficiently, then scale back after the busy period, avoiding unnecessary costs while maintaining service quality.

Reduced operational risks

By relying on outsourcing companies to handle specialized tasks, you can significantly reduce operational risks. Transferring responsibilities to external experts can help your business avoid errors and comply with regulations, particularly in areas that require constant oversight.

For instance, a manufacturing company might contract its supply chain management to outsourcing companies to alleviate the burden of meeting complex safety regulations and industry standards. By outsourcing this vital process to third parties, the manufacturing company allows its internal team to focus on production and quality control rather than navigating complex logistics.

When should you consider outsourcing?

Outsourcing can be a beneficial strategy in several scenarios, including:

• Scaling your business: When rapid growth requires additional resources without the commitment of full-time hiring
• Reducing costs: When you need to cut expenses related to salaries, benefits, and overheads for non-core functions
• Bridging skill gaps: When your business lacks the necessary in-house expertise for tasks and outsourcing can help you quickly fill those gaps with external specialists
• Managing time-consuming tasks: When administrative functions like payroll, HR, or customer service take too much time away from core business activities
• Improving efficiency: When outsourcing can streamline operations and free up internal resources for strategic projects

Streamline compliance and HR with Rippling

If you're looking to streamline your business operations, Rippling is your go-to partner, offering a comprehensive, single-system solution for HR, spend, and IT. With Rippling, you can manage everything from payroll and benefits to device management, expense tracking, and financial reporting—all in one place.

Rippling offers both PEO and ASO services as powerful outsourcing options for businesses looking to grow and improve efficiency.

If you require flexible support, Rippling ASO automates time-intensive compliance tasks and provides expert HR assistance while allowing you to bring your own brokers, benefits, and workers’ compensation plans. If you need more comprehensive support, Rippling PEO handles all the important but tedious admin, offering a co-employment relationship that manages payroll, benefits, workers’ compensation, and EPL insurance. 

With Rippling, you don’t just outsource tasks; you transform the way your business operates and gain the freedom to focus on what matters—growing your business.

Outsourcing FAQs

What are the 4 types of outsourcing?

The four types of outsourcing are onshore outsourcing (within the same country), nearshore outsourcing (to nearby countries), offshore outsourcing (to distant countries), and cloud outsourcing (using cloud-based services). Each type has its benefits depending on your business needs and access to talent. 

What is the difference between outsourcing and offshoring?

The main difference between outsourcing and offshoring is how companies handle the work.

In outsourcing, a company contracts a third party to perform a specific task or function. An example of outsourcing is a company using a business process outsourcing (BPO) company in Indonesia to manage its customer service. 

In offshoring, a company moves an entire business process offshore but still manages it internally. An example of offshoring is a company setting up and running its own call center in a different country.

Why do companies outsource?

Companies typically adopt an outsourcing strategy to reduce costs, access specialized expertise, and improve efficiency. By delegating non-core tasks like IT support, payroll, or customer service to external providers, businesses can focus on their core operations, scale more easily, and adapt to changing demands without the overhead of hiring and managing in-house teams. 

What is an example of outsourcing internationally?

An example of international company outsourcing may include a software company partnering with an offshore IT support provider after expanding into new markets. The company may outsource its technical support to a team in another country, like India or the Philippines, where the provider handles customer inquiries, troubleshooting, and software updates. This allows the software company to offer round-the-clock support for its global user base while reducing costs associated with hiring and training an in-house team in each location.

This blog is based on information available to Rippling as of October 21, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.