Outsourcing for businesses in 2023

January 11, 2023
Cameron Jones

I come to this topic from both sides of the isle, client and agency. Operating a small Manchester based video production agency and have been outsourcing freelancers for production, SEO and branding for over three years. On the flipside, as a creative agency, we are also hired by businesses to outsource their film production.

The Economic Climate

It is easy to forget the huge impact that covid lockdowns had on every single business globally. Still reeling from the effects, it’s likely that we can expect revenue increases compared to the previous two years of extreme uncertainty. Since many businesses experienced a recession in 2008, it would seem that businesses are using their past experience and hedging their bets on another recession not coming close to the economic effects of the pandemic.

The uncertainty of the economic climate naturally creates a nervousness around new hires. Outsourcing, as apposed to hiring, is the more risk averse option when needing a problem solved. It guarantees expertise, no further investment (training, etc.) and little to no long term commitment. It follows that small businesses are choosing the more risk averse option in this uncertain economic climate.

How much should you spend on outsourcing? 

Prioritising outsourcing comes from a recognition of expertise of the business owners themselves and the freelancers/agency. Higher spend on outsourcing may be linked to a need for first time success, as businesses attempting to conserve budgets will spend high to ensure their return on investment.

In the globalised economy, facilitated by vendor platforms such as Fiverr, outsourcing tasks to foreign economies can often lead to reduced spending. However, my experience in this approach has been mixed. There have been many instances where the face value savings on freelancer/agency rates has been offset by difficulties in communication. A combination of time difference, text-only communication and language barriers have made the ‘cost-saving’ Fiverr-style outsourcing only increase the time spent on tasks client-side, and have been therefore far from efficient in the end.

Large businesses are naturally well placed for high spend when it comes to outsourcing. The question of spend will be more pertinent to SME’s. These businesses are usually made up of generalists. As a video production agency often working with small businesses, we receive enquiries for projects that could be completed by in-house creatives or marketing managers, but they make a conscious choice to outsource in particular cases. Usually they contact us to fill skills gaps when the stakes are high and the business can’t afford to get it wrong. Particularly for luxury brands, the quality of their marketing assets are a direct reflection of their product quality. The effects could be detrimental to their reputation if an error is made. For this reason, small businesses usually outsource the production these assets to external providers with deep skills, due to the associated high stakes.

Freelancer or Agency?

Part of the objective when outsourcing is to claim back time to the employees, who can focus their attention to those tasks, unique to to the business, which can’t be outsourced. Going with an agency, there is the expectation of assumed responsibility for the entirety of a project, rather than a freelancer or consultant who may need to be assisted by an employee, eating into their time. There are many more factors when deciding between an individual or an agency, but I find this to be the most worthwhile consideration when suitability of expertise is not a differentiating factor.

Looking ahead

The most recent covid pandemic had demanded that businesses develop their tolerance for extreme volatility, both economic and social. Many businesses will be using those same problem solving strategies applied in the pandemic to combat the looming recession. With those muscles of the business still in good shape, this should inspire confidence when staring into the unknown of another period of uncertainty. There is no doubt that outsourcing will be a large part of tackling future challenges for all businesses.