Debunking the Fear of Outsourcing

Why Companies Should Consider Outsourcing Key Services

By Mark Johnson
Originally Posted: June 26, 2010
 

For small businesses and their owners the immediate thought is to try to do everything themselves or with a trusted group of employees (some of whom may be family members or close friends). This approach seems safer and cheaper, since the natural reaction to outsourcing draws the following apprehensions from business owners:

“Outsourcing is too expensive.”
“How can anyone who is not part of the business know what I know about my operation?”
“I will lose control over the process, forcing me to rely on others who have different priorities.”
“How will I know how to choose a particular service for outsourcing?”

However these gut reactions are far from reality. Let’s answer each of these questions as all show you that in many situations outsourcing can be an excellent solution.

Outsourcing can be economical in many circumstances.

The cost-effectiveness of outsourcing isn’t an all-encompassing law. However, if the service allows you the opportunity to decide when and how much time you’ll need to pay for it, then outsourcing becomes very cost-effective. This is because the cost of outsourcing can be fully managed to only force you to spend money when the service is truly needed.  For example, a business can save significant costs by paying for managed IT services — an outsourced help desk — rather than hiring a full-time employee as a network administrator.

 

Outsourcing allows the business owner to focus on their strengths

By outsourcing services, the business can concentrate on their core competencies rather than deal with the complex payroll rules to pay employees on a bi-weekly basis.  The key here is to outsource those functions that are not core competenciesallowing the business owner the time to focus where they have expertise.

 

The business owner can still determine the amount of control they have

While outsourcing does require the owner to relinquish a level of control, this issue can be largely mitigated by having the owner effectively managing outcomes, as they would with any vendor.  By focusing on the competitive process and investing time to research the best services for the business, the owner can minimize their loss of control and instead help the business in more substantial ways.

 

Limit the risk of deciding on an outsourced service

First choose the outsourced services on recommendations you trust and then leave options in the agreement so you can replace the service if their performance is subpar.  Do this by limiting the contractual period to one year or less when you are taking on a new service.  Also, have a clause that allows for the cancellation of the contract with a 30-day notice.

Good examples of outsourced services include:

  • Payroll
  • Human Resources
  • Marketing
  • Web Development
  • Network Support
  • Bookkeeping
  • CFO

 

Outsourced services should be an asset, not something to be feared. Also, keep in mind that an outsourced service will have experience with a variety of different business situations, allowing them to be both knowledgeable and objective with any advice they impart.

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