Outsourcing has become a major trend in business over the past few years. Farming out some internal business functions has allowed business owners to cut costs and allot more time into developing their products/services and growing their business.
If you are planning to outsource some tasks, here are some important things you must know.
What is Outsourcing?
Simply put, outsourcing is the practice of delegating certain job functions to a third-party service provider rather than to an in-house employee or team. The business roles are outsourced either to a company or to an independent contractor.
Companies, big and small, typically outsource backend office functions such as accounting, HR management and IT to help them scale while restraining overhead and payroll costs. Outsourcing also allows them to access top talents and state-of-the-art technology that they would otherwise not be able to afford to set up in house.
Is Outsourcing Right for Your Business?
Outsourcing makes sense if you have roles that:
- Are highly repetitive and time consuming. If you spend most of your hours doing the same thing every day, you are not being your most productive. Bookkeeping, data entry and inventory tasks fall into this category.
- Require specialised knowledge. If you have little or no knowledge in, say, accounting or IT, it is better to hand over the reins to someone who specialises in the job. This reduces errors and ensures better quality results. When you outsource these tasks rather than handle it in house, you only pay for what you get and not for an employee’s entire monthly rate.
- Demand executive skills or expertise. For example, you may need financial analysis a few times each month. Rather than paying a CFO’s salary, you could simply have a CFO-level professional to handle the books when needed.
- Are too expensive to fill. If you have a new project, it can be impractical or inefficient to assign a full-time employee to do it. Outsourcing not only helps you cut costs but also reduces the risks involved in case the project doesn’t turn out successfully.
How You Can Make Outsourcing Work for Your Business
Firstly, you have to determine your core competencies so you can identify which tasks demand your expertise and which ones you can take off your plate. Once you have done that, it all boils down to choosing the right contractor for your needs.
To ensure a prospective contractor can really do the job, check their references or business reviews to find out if their past and current clients are satisfied with their work. Also, research the industries and type of workload the contractor is accustomed to handling. Find out if they have the technology and skills to produce quality results as well. Most importantly, make sure to choose a contractor whom you are comfortable communicating with.
When interviewing an outsourcing partner, make sure to discuss and agree on a set of performance metrics and lay out your expectations. You can never be too careful in choosing an outsourcing firm.
Relinquishing control over low-level operations is probably the smartest move you can make to ensure the long-term success of your business. Remember, though, that this will only be possible with the help of the best outsourcing partner.