Outsourcing is a big deal in the global economy. Articles, books and blogs are written about it all the time, you can also attend countless seminars on the subject. In Google alone there are over 58 million links so there is no end to the amount of information and opinions on how to do it right or avoid making major blunders.
By far the most advocated approach is to focus on your company’s core competency and then outsource everything else. This approach is sensible in theory, and to a certain degree in practice, but like everything else you can blow it out of proportion and take it too far. The key here is to fully understand your business needs and its goals and then decide how you can integrate outsourcing to help you achieve them.
When deciding what to tasks and processes to outsource, there are some things like printing, legal services and health insurance that are rather obvious, and a good number of businesses outsource them. However; some functions are less obvious and are either outsourced or not depending on a person’s expertise. For example, if you have an accounting background, you would most likely maintain your own accounts and file your own taxes. There are also tasks that many people could do themselves but probably shouldn’t. For example, most people could create a basic Web page or company logo, but the end result would differ significantly between doing it yourself and hiring a professional. Then there are those vital business functions that need your close attention and should not be outsourced like cash flow management and in many cases customer interactions.
There is also the situation where it makes sense to initially outsource some tasks and then bring back in-house later. For example, if you aren’t experienced at hiring an administrative assistant, you can use a temp agency. Temp agencies charge a premium, but you get significant value for money, they will make sure they understand your requirements, advertise for people, sift through them and send the best candidate to you. If for whatever reason they don’t work out, you call the temp agency and tell them to send someone else. When you find the right person and decide you want and have the need to hire them long term, you can pay the temp agency a fee and employee them as part of your team.
One of the big advantages to outsourcing is flexibility and therefore does not have to be something you do until you have enough work for a full-time employee. You can reduce the hours of an outsourcing supplier but it is much harder to tell an employee that you have to reduce their hours. Another advantage is that it’s not necessary to become an expert in a particular area, the outsourcing supplier is your expertise partner and works with you to satisfy this gap just like designing a Web site or logo.
Of course the most positive benefit of outsourcing is the ability to save money. The amount will depend on the size of your company, the specific tasks you outsource and how long you outsource. For example, companies that outsource their IT services like the help desk, computer support and maintenance and pay significantly less compared to what you would pay for a full-time IT person to give the same level of support. Also outsourcing bookkeeping and office administration will attain similar savings. As any company continue to grow it will be necessary to re-evaluate these decisions and adapt to the changing business requirements.
A disadvantage to outsourcing is that you are placing a piece of your company in the control of another company. So it is necessary to build a trusting partnership and negotiate the particulars of your business relationship from the start. Also you will need to evaluate their ability to remain in business and if they will be able to adapt to your growing and changing needs.
The best policy is to plan carefully and think about each function and process within your business and decides which tasks make sense to outsource and then give it a go, starting with the smallest task first and then build upon each experience.
