The benefits of outsourcing for your business

 

 

Whether you are setting up your own business, or are faced with the prospect of rapid expansion, maintaining your core values and quality of service can become difficult under the strain of an increasing workload. Even in bigger businesses, when the demands of functional responsibilities grow, whether it is in accountancy, networking, marketing or others, staff and time constraints start to become highly problematic. Stretching yourself and your staff too thin can be hugely detrimental to your business’ growth and reputation.

 

Outsourcing offers, an often necessary, and advantageous solution to a lack of time and manpower for new and existing businesses. By offering up an extra pair of hands to help out with managing busy periods or bringing a specific set of specialised skills, outsourcing can support your core employees, offer new insight and expertise and develop or maintain business growth.

 

Outsourcing is essentially the practice of using outside firms to handle functions that are usually performed within a company, such as accounts & bookkeeping, marketing, payroll processing or a myriad of other tasks. Entrepreneurs and small companies may routinely outsource job roles that they are unable to process within their own staff, whether that’s due to budget or time constraints, whereas larger companies often outsource to reduce costs. Whilst outsourcing is by no means a new practice, after the outsourcing mania of the 1990’s a thriving industry has grown to meet the needs of over worked or over budget companies.

 

Assessing where your weaknesses as a team or as a business lie, or pinpointing where the most resources are being spent with little gained, and choosing a company that offers that service to take over, can be a sound business investment. 

 

Balanced outsourcing can provide a number of important benefits to businesses at any stage in their lifespan, from the more technically orientated to mitigating larger efficiency and productivity risks. The primary benefits of outsourcing are as follows:

 

In periods of growth, or when establishing a new business, the back-office operations of a company, such as payroll or purchasing, can consume resources, both human and financial, at a rapid rate, with what appears to be very little payoff. 

 

Although necessary, these activities can often distract from the larger business goals at hand, or direct time away from more pressing responsibilities - especially at the outset of a new business venture. Outsourcing activities like vital financial functions will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.

 

One of the primary motivations for outsourcing is obviously the potential opportunity for large financial savings. By outsourcing at the beginning of your business, you can convert fixed costs into variable costs and avoid large expenditures in the early stages of your business, allowing you to drive more capital directly into revenue producing activities. 

 

Similarly, companies that take on the responsibility for every function have much higher overheads for practices like development and marketing, which consequently get passed onto customers. The economy of service that comes from an outsourced provider can give your company an essential competitive edge.

 

Outsourcing certain operations allows for a greater oversight of both their efficiency and their use of valuable resources. Whereas management of specific facets of your business can often be left under-supervised to overrun and overspend within busy periods, an outsourced company adds an extra layer of assurance and management into poorly controlled areas. 

 

Hiring staff for specific tasks or seasonal, or cyclical operations can be a waste of valuable resources, and can often be unreliable. For instance, if you only need a business accountant for tax season and auditing periods, building an entire accountancy department is going to be counterintuitive and ultimately pointless. Outsourcing gives you the opportunity to bring in additional resources only when necessary, for a fixed or extended period of time, for a consistent and measurable cost.

 

Moreover, training up staff members in specific skills that they may only need to know occasionally requires a bigger expenditure than it is necessarily worth, especially when it is more fiscally sound and productive to outsource the job on an adhoc basis.

 

All business operations inherently carry a certain amount of risk. Technology, competitors, regulations and market conditions can change extremely quickly, and when you are not particularly skilled in one area, predicting and managing potential risk is nearly impossible. Luckily, a byproduct of outsourcing any roles means that your provider will assume and manage the potential risk for you, and be a lot better at avoiding any particular pitfalls. 

 

Most small firms simply can’t afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act “big” by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

 

Ultimately, as much as outsourcing can provide numerous benefits to any business, employing outsourcing within your own business should ultimately be a tailored, and intimate decision. Outsourcing is not one size fits all, and outsourcing too much can be as damaging, if not more so, than not outsourcing at all.

 

That said, if outsourcing is done wisely, with a measured approach, it can drastically improve your efficacy, flexibility and catalyse business growth and improvement.