Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

Subscribe to our blog

What’s the value of outsourcing in an uncertain economy?

Posted by Tasnim Ahmed

October 20, 2022

The consumer price index for September 2022 showed overall inflation surpassed 8% for the seventh consecutive month. As the economy shrinks and interest rates climb, businesses are scrambling to reduce spending as policymakers mull solutions. 

With the continued downturn, many business leaders are grappling with a push for higher wages at a time when customer demand is falling. But these seemingly irreconcilable forces shouldn’t automatically deter them from pursuing growth.  

Even during an economic downturn, companies can improve operational efficiency while cutting costs through business process outsourcing. Below we’ll go through the top five ways businesses can maintain stability amid market volatility by outsourcing routine functions, ranging from  bookkeeping and HR to accounting and CFO services.

Outsourcing reduces costs 

A sputtering economy prompts business owners to target higher productivity and lower costs. But stress balloons as everyone is pressed to accomplish more with fewer resources.  Meanwhile, salaries, benefits, rent and the like consume a sizable portion of the operational budget.

Outsourcing offers an opportunity to lower overhead. By engaging with a single outsourced provider, costs are reduced for businesses that might separately incur invoices from a bookkeeper, a payroll provider and a CPA firm, for example. A smaller in-house headcount also reduces the amount of required office space. And reputable outsourcing providers frequently offer their own software solution at a lower cost, eliminating the need to invest in technology. 

In short, outsourcing noncore business functions allows companies to reallocate their resources to core functions that generate revenue.

Outsourcing improves efficiency 

In lean times, businesses may look to cut costs by trimming staff. The first ones to receive a pink slip are often lower-level employees who perform routine business tasks. In their absence, those now-unfinished tasks may be reassigned to remaining employees. 

But this heavier workload risks lower output and efficiency among higher-level employees who now must squander precious time on menial or low-value tasks rather than their core competencies Outsourcing to a provider whose teams’ skills match or even surpass those of entry-level employees resolves this conundrum without compromising work quality.

Talk to us about how our comprehensive back-office services can help your business run lean.

Outsourcing is flexible

Outsourcing not only enables businesses to expand more quickly, but it also enables them to briskly pare back operations. Business closures are not uncommon during tough economic times, but having an outsourcing partner simplifies the process. They don’t have to lay off in-house employees and can focus on selling sites that are no longer needed. Likewise, if a business buys additional sites, integrating those new outlets is simplified with staff and procedures are already in place.

Outsourcing is conducive to better benefits

Employee benefits may be on the chopping block in order to cut business costs during a recession. However, businesses who outsource functions such as finance, accounting, HR, IT or marketing are not required to pay corresponding benefits. That means they are better able to continue providing the same benefits to in-house employees.

Outsourcing offers intelligence and insight

A competitive outsourcing company will offer best practices, broad experience and in-depth insight as professionals who have gone through previous downturns. Compliance concerns may be alleviated by the outsourced provider’s knowledge of federal, state and local requirements. 

When the world edges towards a recession, many business leaders will be searching for market intelligence and insight, and the right outsourcing partner can provide it.

The takeaway

In a tumultuous economy, businesses must reduce risk, cut expenses, restructure their balance sheets and be ready to pivot. To that end, the right outsourcing providing is among the best tools available to hedge against a downturn.

Want more? Escalon provides outsourced finance, accounting, HR and risk management to growing companies. Talk to an expert today.


Tasnim Ahmed
Tasnim Ahmed

Tasnim Ahmed is a content writer at Escalon Business Services who enjoys writing on a multitude of subjects that include finops, peopleops, risk management, entrepreneurship, VC and startup culture. Based in Delhi NCR, she previously contributed to ANI, Qatar Tribune, Marhaba, Havas Worldwide, and curated content for top-notch brands in the PR sphere. On weekends, she loves to explore the city on a motorcycle and binge watch new OTT releases with a plateful of piping hot dumplings!

We provide you with essential business services so you can focus on growth.