The desire to do everything on your own, where you are always ready for a challenge and get the result you want in your way, can backfire at times. This usually happens when you take on tasks that are out of your realm of expertise, or ones that take time you can spend more productively.
In 2017, the global outsourcing market accounted for $88.9 billion. So, should you become a part of it and will it work well for your business? The answer is easy to arrive at if you pay attention to a few simple factors.
Why Outsource?
The reason to outscore can be varied, depending on specific business requirements.
- Seeking expertise. Imagine running a high-end restaurant that does brisk business. Would you consider outsourcing its payroll and taxes to a bookkeeper or prefer doing it in-house? Unless you have the expertise, you’re up for a challenge, and remember that taxation rules remain subject to change.
- Below par performance. If your business is unable to improve its performance in an area that is not its core, you may consider outsourcing.
- Cost reduction. If you don’t have the resources to hire a new employee, consider outsourcing one. You may also reduce costs by outsourcing existing work, provided you don’t compromise on quality.
- Quicker turnarounds. If you take on large assignments that have you up and running all the time, outsourcing may give you the breathing time you require. Besides, when you get a specialist for the job, he or she will tend to take lesser time than you.
- Freeing up time. Would you spend hours putting together a list of city-specific vegetarian restaurants in your country, when you can get someone to do it for you more cost-effectively?
- Risk sharing. Risk analysis determines the outcome of several projects, and outsourcing gives you the means to shift some responsibilities. Besides, since you outsource to a specialist, you can trust your vendor to plan its risk-mitigating factors accordingly.
Possible Downsides of Outsourcing
If you can avoid the pitfalls listed below, you may still consider outsourcing.
- Hidden costs. While outsourcing is meant to serve as a cost-effective alternative to hiring in-house, there have been instances of inflated bills owing to hidden costs. Make sure you read the fine print of contracts carefully, no matter whether you’re outsourcing locally or internationally.
- Losing customer centricity. The customer should be at the core of all your efforts, and this might not be the case with a company that handles multiple clients. Even if you are offered a dedicated team, make sure it understands your company’s goals and values.
- Loss of control. Loss of viability remains a possibility when you outsource. In such instances, you may lose the ability to control factors such as service standards, quality, functionality, and availability.
- Loss of confidentiality. Any breach in confidentiality because of an outsourced vendor reflects poorly on your business. Take particular care when outsourcing any function that involves handling of sensitive or confidential information.
If you are considering outsourcing, make sure you keep your core services in-house. For all other functions, do not compromise on quality. Keep your outsourced vendors on the same page so they know what you expect and try to do your best by them.
Gav Smythe, from iCompareFX, opines that “paying attention to even seemingly small aspects can take an outsourced business relationship along way.” In his case, he shifted paying his overseas employees from a freelancing platform to FrontierPay, a specialist money transfer company. This way, they saved around 10% of their overall earnings.
Conclusion
While there is no telling when the concept of outsourcing began, you can confidently say it’s here to stay. As long as you pay attention to factors that might go wrong, there is no reason why you should not jump on the bandwagon and benefit.
