Not many companies have access to the complete range of skills needed to boost and sustain a company's growth trajectory. Instead, as businesses we tend to form partnerships with suppliers as well as with specialist contractors to help us grow.
Working with external contractors, or outsourcing, can allow companies access to skills that they could not normally afford or would not themselves be able to attract as employees.
When you’re running a small growing business, or may be a start-up that is beginning to get some momentum, an increasing workload should not mean a mad scramble for additional full-time employees. This is where outsourcing can be used as an effective and financially viable tool to provide expert resources that compliment your efforts.
Outsourcing does has its benefits; it can take some of the pressure off your in-house team, allow you to re-direct limited resources to higher yielding activities and help you focus on other critical efforts to fuel growth.
But there are obvious concerns about letting an external resource, regardless of how qualified or experienced they are, to directly contribute to running your business.
Knowing how and when to outsource can be complicated.
Companies generally outsource in one of two ways: they outsource a single component of their daily operations, or they establish outsourcing as a strategic part of their business model.
So, for example if you are an electronic goods brand and your strength lies in the design and marketing of a product, you might outsource your whole supply and manufacturing chain. In contrast if you lack technology and IT skills, you may solely outsource a single portion of your daily operations such as the IT infrastructure.
So – how can you strategically build outsourcing into your business?
What should you outsource?
The tasks that you choose to outsource will depend to a great extent on the industry segment that you are in.
Generally, there are two types of tasks that lend themselves particularly well to outsourcing:
Tasks that are important but are not a critical component of your growth strategy.
For example if your company manufactures sport socks. Now you'll need to deliver your products to sports outlets, and which logistics option you adopt is unlikely to impact the customers who visit the store to buy your socks. There is little strategic value to your business delivering the product itself, so this might be a task that you outsource. Your expertise is in the manufacturing and design of sports socks - not logistics. If you can ensure that the supplier who delivers your product will be cost-effective and timely, outsourcing may be able to help you more efficiently complete this task and let you focus on what you do best.
Tasks that make up one small part of the overall customer experience, although important are not highly skilled.
For example if you look at a lot of the major hotel companies they outsource their room cleaning services. These hotel companies reduce cost by contracting suppliers to clean the hotel rooms, therefore saving on full-time staff and redirecting their investments into other areas of the company.
When should you outsource?
One of the best ways to decide whether or not to outsource a task is to assess the cost benefit analysis of you undertaking a particular task in-house. For example if you are launching a new product, with the right amount of time, resource and money you could execute a product development plan internally. But in the meantime, you still need to update your website and implement an IT infrastructure. In the short-term, you can outsource the product development work to a contractor, with the long-term goal of recruiting an in-house marketing team.
One-time events also work hand-in-hand with outsourcing. Unless you regularly change your website design, chances are you will only have to create your company website once. It may be more cost-effective to take this project to a third party that has expertise and can deliver a website in a timely manner without diverting too much of your internal resources.
While there may be direct cost savings if you outsource particular work to a contractor, you'll also need to factor in the need for managing an external resource and the impact that it will have internally on your own staff.
It would be unlikely that an outsourced resource will be sitting in your office, so getting your point across via phone calls, emails, and other digital media is different than being able to have a face-to-face conversation much like you do in-person with your own in-house team.
Technology has greatly increased the efficiency of managing a project that you outsource using apps such as Trello and Slack - but you still need to assess a project and whether it would benefit from being outsourced which can depend on how critical it is to your business.
When properly utilised, outsourcing can enable you to streamline your business operations. It can help you more strategically utilise your resources, maximise your time, and move forward with key growth initiatives now.
You should pick an outsourcing partner that is adaptable and listens to your needs. Giving away control to a third party needs a high level of trust.
Additionally, find a supplier that understands your most valuable asset - your staff.
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