Today’s fast-paced world offers business owners multiple solutions for both cost and time efficiency. Outsourcing has become one of the most popular ways to ensure productivity and streamline costs, allowing companies to redirect part of their work towards professionals. This enables managers to focus on finding new solutions for business development.
But the cases when outsourcing has proven to be more harmful than helpful are plenty. Some companies damaged their business by outsourcing too early, while others failed to keep up with the competition by not outsourcing at all. Deciding on the best moment to outsource, as well as what projects can be done in-house, requires taking into consideration some key factors, such as pricing, resources, deadlines, as well as experience. When outsourcing, you will be placing an important part of your business in someone else’s hands, so doing it at the right time and with the right people is paramount. Below are some aspects you need to take into consideration before outsourcing any kind of work.
Objective
Before you start looking for companies that can take over some of your work, it is extremely important to understand what the basic objective of outsourcing is. Although cost efficiency is one of the reasons companies choose to outsource, it is not the most important one. Some companies choose to outsource, in order to gain a competitive edge, while others look at this as a way to generate more revenue and save time. When it comes to outsourcing, the reasons might be purely subjective, but you need to acknowledge and understand them.
Based on your motives, you need to determine what aspects of your business needs outsourcing. For example, if you need more expertise on a subject, then you will be outsourcing in the more technical areas of your business. The most outsourced areas of business are:
– Accounting and bookkeeping: these are essential for any business, but many small businesses can’t afford and don’t even need to hire a full-time employee for this.
– Legal: besides being expensive, many businesses don’t need lawyers on a regular basis and turn to firms or individual lawyers for things such as contracts, merges or handling cases when necessary.
– Marketing: although you know your business and have a clear idea of the image of your brand, marketing should always be left to experts. A marketing agency has access to professionals and much more experience.
– Software Development: developers can be quite expensive to hire on a long-term basis, especially if you won’t be needing their services daily. Software development companies offer expertise and, in some cases, a dedicated development team that handles your business only.
– Customer Service: managing customer service is quite hard if you don’t have a designated team, which can be hard in a small office and requires significant costs.
Cost Efficiency
In many cases, the increasing profit margin is the main reason businesses choose to outsource parts of their work. The core of outsourcing should be improving business bottom lines through reduced operational costs. IT outsourcing, for example, can be a cost-effective solution for many businesses. However, outsourcing is not always the best solution and can prove to be more demanding than if you had an in-house team.
Before outsourcing, take into consideration the operational costs of both options. What will it cost you to hire a full-time employee or team to deal with this particular aspect of your business? Will outsourcing help you reduce a significant amount of your costs? Take for example accounting. If you have a small business, outsourcing might be a good idea, as you won’t be needing someone to deal with accounting all day every day, but if your business starts to grow, you may want to consider hiring someone to do the work in-house.
Team Expertise and Tools
You chose to outsource, in order to benefit from a professional team that has more insight in a certain field, right? Then make sure the team you will be working with has all the experience and tools you need. Make sure they have experience in working with a business model similar to yours, in order to ensure the best results.
There are many companies or freelancers that offer outsourcing solutions, which means oftentimes, you will have plenty of options to choose from. Take into consideration the fact that you will be putting part of your business in the hands of a third party, so make sure you only hire professionals. They need to be familiar with your requests, provide support whenever needed, as well as keep transparency and open communication with you.
Don’t forget to ask about project documentation, as you may need to refer to it even after the work is done, especially in the IT sector. If, for instance, you will need to outsource a similar project in the future, this documentation will be of great value.
Company Reputation
Before signing on the dotted line, take some time to think about how outsourcing will affect your business’ reputation. Take customer service for example. If you think about outsourcing that part of your business to a call center, make sure their employees are professionally trained to handle any type of situation. If done correctly, customers never realize they are not talking to an in-house person. But when outsourced poorly, it can backlash quite bad and result in damaging your company’s reputation.
Make a point in visiting the vendor in person before making a deal, to personally see how they are conducting business, what level of professionalism they are on and how their employees are treated. If employees are treated poorly, chances are they have no motivation to give their best. Ask for a reference from previous collaborations and contact them for feedback. Ask how they met their deadlines if there were any communication issues and how did they solve unexpected issues.
It may be worth talking legal aspects form the start as well. You don’t want to be pouring money into a company that will not take any responsibility if something goes wrong. Ask about their Service Level Agreement (SLA). It is extremely important to work with a company that has a clear SLA, in order to ensure they will provide a quality output at all times.
