Contributed post.
For most small businesses to thrive, outsourcing selected business processes is essential. It’s simply not cost-effective to hire full-time staff for every skills gap. Large companies can also benefit from outsourcing specific services to supplement their internal talent.
There’s no limit to the kinds of services any organization can outsource. These include IT services, marketing, sales, accounting, customer service, and manufacturing, to mention a few.
But why do most companies outsource such kind of processes? The answer is for efficiency. For your business to efficiently conduct activities, it’s wise to evaluate outsourcing tasks, roles, and functions that aren’t part of your central valuable proposition or capabilities.
Outsourcing can help you focus on the core activities of your business to achieve overall goals. Your company can also gain access to specialized talent, high-end technology, and cutting-edge solutions. To top it all off, outsourcing allows you to share business investment risks by shifting responsibilities.
But before you can realize these benefits, there are certain factors to consider to ensure you pick the right provider. If your business is planning on outsourcing services, here are four key considerations.
Your Staff’s Attitude and Morale
If not managed properly, the outsourcing process can have negative impacts on your employees’ productivity. This can result from low morale due to feeling they are not competent enough to perform the tasks being outsourced, or worse, fearing for their jobs.
Therefore, it’s vital to communicate with your employees the need for outsourcing various services. It can help clear up any doubts and misunderstandings. Explain to employees your rationale, the long-term benefits of outsourcing, and that doing so doesn’t mean their roles or status are in jeopardy.
Level of Expertise
A second crucial thing to consider is the provider’s level of experience and knowledge they bring to the table. You can always find companies willing to offer services at lower prices, but generally speaking…you get what you pay for.
So, while cost will of course always be a consideration, make sure you research the provider to determine how competent they are to provide the needed services. They should be able to fix your known problems as well as bring new ideas to the table.
For instance, if you want blockchain to be part of your finance strategy but don’t have the expertise on staff, you should outsource to firms capable of buying crypt-assets on your behalf.
Cost Structure
The cost of outsourcing depends on the provider you select for your business. Some may charge hourly, monthly, annually, or on a project-by-project basis, depending on how long you plan to work together. Monthly costs may be slightly higher but provide more flexibility.
You must be diligent when outsourcing and ensure you identify all hidden costs to avoid surprises later on. Keep these potential hidden costs in mind; consulting, employee disengagement, lack of agility, and loss of control.
Privacy
Outsourcing means giving service providers access to company information. Most providers are above board of course, but one bad egg can have adverse outcomes on the operations of your business.
Before outsourcing, assess all the information to share with your providers. Identify the most critical information, and ensure what you share will be sufficient. Also, have all providers sign a non-disclosure agreement (NDA) before sharing any internal information.
By keeping these factors in mind, it will be easier to conduct outsourcing effectively, and choose the right providers for long-term engagement. Ensure you keep your employees informed, and carefully evaluate experience, cost structure, and privacy.
Stanley Thomas says
Your blog is very informative. I need to ask a question. What are the criteria for measuring which roles to be outsourced in an organisation
Tom Pick says
Thanks Stanley! There are several criteria beyond just cost. One is degree to which that position needs to collaborate with others in the organization. The greater the amount of coordination required, the less likely that position will be outsourced. A second is access to company systems; positions requiring access to multiple, core company software systems are less attractive for outsourcing that those which require access to only a few systems, such as CRM and project management. A third criteria is access to internal, and especially confidential information. That’s why most businesses keep core bookkeeping and AP tasks in-house, for example, while outsourcing more peripheral and specialized finance tasks like payroll and tax preparation.