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What Makes Outsourcing the Ideal Option for Companies?

What Makes Outsourcing the Ideal Option for Companies?

Amid ever-changing business environments, requirements, and needs, companies both big and small consistently need to look at investing in strategies to adapt and enhance productivity, all the while remaining profitable.

Outsourcing is one such method used to cut costs and boost their bottom lines. This practice involves engaging certain business functions – particularly backend activities, such as accounting, payroll, and taxation – to external specialist firms.

Understanding what the outsourcing process involves and why it provides a competitive advantage can support your business to streamline business processes and improve overall efficiency.

In this blog, we share more about the world of business outsourcing and the numerous benefits and drawbacks to consider. Find out how InCorp Global can help your company make informed decisions around a better outsourcing strategy.

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What Are the Types of Outsourcing?

There are 4 main types of outsourcing that we look at:

Onshore Outsourcing

Also known as domestic outsourcing, this is the practice of contracting and delegating business activities or functions to external service providers within the same country or region where the company is based. This facilitates communication as there is little to no language barrier.

Offshore Outsourcing

Offshore outsourcing refers to allocating business functions or tasks to external outsourcing providers in a different country, typically one with lower labour costs. 

Companies choose offshore outsourcing services to leverage cost advantages and access a global talent pool while maintaining a focus on core competencies.

Nearshore Outsourcing

This is the practice of delegating business functions or tasks to a third-party provider located in neighboring or nearby countries. It involves partnering with service providers in geographically close locations that share similar time zones, cultural affinities, and economic integration. 

Nearshore outsourcing offers several advantages and aligns with companies’ objectives of cost efficiency, talent access, and operational flexibility.

Onsite Outsourcing

Also known as in-house outsourcing or insourcing, this refers to the business practice of when a company hires external resources or service providers to work on-site at the company’s physical location. 

Instead of engaging with remote or off-site teams, companies opt for onsite outsourcing to leverage specialised expertise and augment their internal workforce while maintaining direct control and oversight.

What is an Example of Outsourced Activities?

Some common outsourcing activities include:

Related Read: How to File Corporate Tax in Singapore

What Are the Pros and Cons of Outsourcing?

There are various advantages and disadvantages that are associated with business outsourcing. We break them down for you below:

Benefits of Outsourcing

Cost Efficiency and Flexibility

Maintaining an in-house accounting, payroll, and taxation department can be expensive. It involves hiring and training staff, providing salaries and benefits, and investing in accounting software and technology. 

Outsourcing these functions eliminates these overhead expenses, leading to cost savings. Instead, you pay for the services rendered, allowing you to allocate resources more efficiently.

Moreover, outsourcing provides flexibility, enabling you to scale up or down depending on your business needs, without the burden of fixed staffing costs. This is especially beneficial for companies dealing with cyclical or seasonal demand.

When operations speed up, they can get access to additional resources through outsourcing, and when operations slow down, they can perform the activities themselves again.

Corporate Memory

Corporate memory refers to the accumulated knowledge, information, and experiences within an organisation that is stored and accessible for future reference.

Having a robust corporate memory is crucial for businesses as it enables continuity, fosters learning and innovation, and improves decision-making. Employees can tap into previous experiences and knowledge, avoiding the repetition of mistakes and leveraging successful strategies.

With an external outsourcing company supporting your firm’s business functions, you can be assured that there will be continuity in terms of corporate memory as we will retain key details and best practices on our end.

Compare this to having in-house staff – if your staff leaves, there is the risk that they may not be able to pass on their knowledge or standard operating procedures (SOPs) to the new hires on time, or even sufficiently for operations to proceed as per usual.

Improved Operational Control

Sometimes, companies that face poorly managed departments that are understaffed or generate high costs can seek a better alternative in the form of outsourcing.

Outsourcing these business activities can help existing employees better manage their workload and encourage management to prioritise key requests for better operational control.

Focus on Revenue-Generating Activities

Since these backend activities are outsourced to others to perform, the company can better use its existing resources to support its core revenue-generating activities instead.

Overall, it will contribute to improving productivity and efficiency, especially for companies that need more expensive or complicated office functions to stay profitable.

Easy Access to Specialised Skills and Expertise

Instead of having to source for your own in-house professionals or train existing staff, you can gain access to individuals who are well-versed in your outsourced activities quickly.

It also means that you can to tap into a larger talent pool of experts, enabling the company to benefit from the expertise of individuals who possess specific industry knowledge or technical capabilities that may not be readily available within the organisation.

Disadvantages of Outsourcing

Reduced Control

When you outsource your business functions to another external service provider, you effectively transfer management to this company. With this, you must note that the outsourced company may not have the same standards or quality as yours does.

Of course, these third-party organisations still grant companies certain levels of control – which is why you must review your choices before deciding on one that meets your expectations best.

Communication Problems

This applies to companies that outsource their business functions to companies or employees based overseas. One example is how larger companies tend to outsource their customer service operations to foreign companies.

This is why onshore outsourcing to a local provider in Singapore, such as InCorp, may be an ideal solution to this potential problem.

Outsource Your Accounting, Payroll, and Taxation to InCorp

As with any business strategy, you must consider the pros and cons of outsourcing carefully. At InCorp, we have a reliable and competent team of professionals who act in your company’s best interests.

Be assured that you will gain the benefits listed above from choosing us as your company outsourcing provider in Singapore. Contact us today to find out more about how we can support your company’s growth!


  • You should consider these factors when you outsource:
    • The type of outsourcing
    • The cost
    • Confidentiality and security of your important information
    • The level of control you wish to retain
  • Onshore outsourcing has traditionally been the most popular choice for its benefits - particularly its cost-saving advantages - as compared to the other options.
  • You can find a reliable outsourcing service provider, such as InCorp, to assist you with your business needs.

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About the Author

Alton Neo

Alton has deep technical expertise in the Singapore Financial Reporting Standards as well as hands-on experience in accounting for publicly-listed entities and growing enterprises in Singapore. Beyond that, Alton also provides expertise to fund managers and family offices on structuring.

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