The new year has started, and with it, many businesses are facing economic uncertainty. Global conflicts, high consumer prices, rapidly advancing AI technology and more cloud the immediate future. Even some of the most optimistic business leaders are choosing prudent planning over aggressive growth.

Many business leaders are narrowing their focus, prioritizing core operations over expansion, looking for ways to achieve sustainability in any economic climate. In short, recession-proofing has become a top priority, and as growth officer of an outsourcing company, I’ve found many businesses are turning to outsourcing partnerships to pursue this priority.

What is the role of outsourcing in planning for a recession or other difficult times, and what are some of the inherent challenges that come with this approach? I’ll address these questions and offer a few tips for finding the right outsourcing partner.

Why Businesses Are Bracing

Here’s a somewhat sobering fact: Including the Covid-19 crisis, the U.S. has endured 14 recessions since the Great Depression. That’s a recession roughly once every six years. While we don’t know exactly when the next recession will come, they are inevitable. Businesses can’t avoid recessions. You can only prepare.

This is why some businesses are reevaluating their spending today, focusing on leaner operations, shifting away from growth strategies and toward refining core business functions. This shift also includes an emphasis on optimizing existing resources while thinking creatively about how to access external resources like labor, technology and production facilities without committing more capital.

Many companies are taking the safer roads, those with the fewest risks. Businesses are embracing the value of measured scalability, strategic outsourcing and, most importantly, lasting partnerships.

The Benefits Of Outsourcing Amid Economic Uncertainty

This is why the role of outsourcing has evolved so dramatically in recent years, from a practical cost-cutting measure into a strategic practice that helps companies manage risk, remain agile and scale without burdensome investment.

1. Companies can choose scaling over traditional growth.

Hiring full-time employees is an expensive undertaking, with the costs of recruitment, onboarding, salary and benefits. This is why many businesses are placing an emphasis on labor flexibility.

Partnering with an outsourcing firm that has access to diverse talent pools makes it possible to scale operations up or down as needed. In addition to making rapid mobilization possible in times of strong demand, outsourcing also makes it possible to respond to a softening market by reducing hours, staff size or production goals without wasting a fortune on hiring and firing.

2. Businesses can turn fixed costs into variable costs.

Cash flow is especially vital in periods of slowing economic growth. Businesses need to remain nimble in the face of unpredictable conditions, shrinking profit margins and lower revenue.

The right outsourcing partner can create access to resources like production facilities, heavy machinery, IT and more without the long-term commitment. Rather than shouldering the burden of fixed costs, businesses can convert these resources into variable costs—and slash them from the budget when the market slows to a crawl.

3. Outsourcing can help companies skip to the front of the tech curve.

Few things cost businesses more than investing in new computing technology and failing to stay on pace with competitors. Advanced technologies like AI, machine learning and automation have already transformed the way we do business. And they continue to evolve at such a rapid pace that internal investment can be both tricky and risky.

Outsourcing is an increasingly preferred alternative to this cost-prohibitive strategy, a way of accessing and adopting these essential technologies without the upfront costs, the time spent on implementation, the internal training and the risk of failure.

Finding The Right Outsourcing Partner

When it comes to the selection process, you may want to consolidate to a few key partnerships for better-negotiated rates, simplified management and increased accountability. Additionally, consider hybrid outsourcing, with real-time onshore project management and access to a cost-effective global labor pool.

Here are some additional tips:

1. Prioritize flexibility.

Choose a partner that can take on specific projects, entire processes or even whole departments. Avoid partnerships that require long-term lock-in periods or subscriptions. You need the agility to pivot as the market shifts.

Work with partners who offer a balance between no-commitment contracts and total commitment to the ongoing success of your business.

2. Seek partners with robust human support.

For many businesses, a key motive for outsourcing is gaining access to rapidly advancing technology in areas like AI, machine learning and automation. However, it’s just as important to choose a partner with the human expertise needed to leverage this technology, the human customer support needed to align this tech with your organization’s goals and human project managers who can provide full accountability.

3. Look for partners with robust cybersecurity protocols.

Compile a checklist of nonnegotiable cybersecurity capabilities including strong password management with multifactor authentication (MFA); current data encryption and endpoint protection; routine security audits and clearly delineated incident response planning; up-to-date access management and identity verification systems; and comprehensive employee security training.

As you seek a BPO partner, look for provider that checks these boxes. Avoid providers with a history of security breaches or compliance failures.

Tackling The Challenges Of Outsourcing

Strategic outsourcing can be a bulwark for companies, helping to guard against the full effects of a challenging economy. But there are some challenges you need to be aware of first.

Among the common challenges that business leaders might face when working with an outsourcing partner are a reduced ability to exercise quality control, diminished oversight in certain areas of operation and an elevated potential for miscommunication. These challenges may be magnified by language, culture and time zone differences when working with overseas outsourcing partners.

The best advice I can offer for overcoming these challenges is to choose an outsourcing partner that offers accessible project management, strong client support and a long track record for balancing local leadership with affordable overseas talent.

In short, it’s extremely important to do your due diligence. Take the time to select a BPO provider with a sterling reputation, deep industry experience and the capabilities to serve as a true partner both in times of growth and recession.

Read the full article on Forbes