Outsourcing— A Wellspring For Any Business (Part 1)

“Outsourcing is inevitable, and I don’t think it’s necessarily treating people like things.” So said Stephen Covey, leading business guru and author. He was one of the first to realise that for a business to succeed in an ever-more competitive market, its primary focus must be on its core business.

In the 1980’s and 1990’s, outsourcing had a mostly negative image but over the past 25 years or so perceptions have changed and, as few functions are perceived as core, the opportunity and push for more outsourcing has grown.

Consider the strong benefits of outsourcing:

  • Work will be done quicker, more efficiently by people trained in that discipline
  • The outsourcing professionals are less likely to be sidetracked by other matters and cannot be given extraneous tasks within your office
  • Costs decrease as you only pay for what you need
  • No holiday pay, sickness or related problems. Your outsourcing contract should ensure continuity of service what the problem.
  • Frees up resources that can then be applied to core competences
  • Brings fresh minds, new ideas and up to the minute industry technical knowledge to the discipline being outsourced.

So, what to outsource and what to keep in house?
Consider the correlation between the contribution a task makes to operational performance and its strategic importance.

If you conduct this analysis of operational vs. strategic importance, you will probably find many tasks fall into the category of: “potentially outsourceable”, (if that is a word?). These might include:

  • Repetitive tasks: Data entry is a good example of a highly repetitive task, essential to the operation of the business but not of strategic importance.
  • Specialised tasks: Increasing your profile on social media will benefit your business but may be beyond your current staff’s skills or availability of time– sub-contracting to an expert in the field will give you the coverage you want, at a lower cost than training up someone in-house.
  • Expert tasks: Keeping the business’ books up to date and keeping abreast of the constantly changing tax regulations is a highly skilled job, perhaps beyond the level of anyone in-house. Appointing a financial expert will save time and stress. Similarly, HR – every firm has to manage its personnel and be compliant with legislation but most SMEs cannot afford to employ one person dedicated to that task.

What about the loss of control, diehard purists may cry – in fact, outsourced services can be measured in terms of savings and service meaning they can be better controlled. (For more on this see the second part of this blog – How to manage Outsourced Contracts). So here’s a sobering thought to leave you with: “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business” Lee Kuan Yew

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