When it comes to small businesses, outsourcing can make perfect business sense. After all, if you don’t have the capability to employ a specialist team such as payroll or IT in-house, you need to source the expertise externally.

While outsourcing specific skills and services makes sense for smaller organisations new research from HR Access suggests it does carry a risk and therefore demands you take your time, do your due-diligence, appoint the ‘right’ supplier and ensure you undertake regular performance reviews.

The report, Payroll outsourcing: could do better! confirms that while many organisations are generally satisfied with the impact and value of outsourcing on their business, there is still a feeling of discontent among many businesses. Those surveyed highlight key areas employers should get right when they embark on outsourcing.

These include the need properly to scope service requirements, implement robust account management practices, establish strong, two-way communications and push for continuous service and supplier improvements.

Roger Fullilove, senior global product manager at HR Access Solutions, outlines three key steps from the study that will get outsourcing on track from the start and ensure it delivers lasting value for your business.

(1) Thoroughly scope your requirements

Allow plenty of time to scope the services you wish to outsource. Investing time at the start of the project will significantly reduce the likelihood of needing to adjust and review your requirements during contracting and the early stages of the project, which also means you’re less likely to incur additional costs.

Remember that a supplier can only work with the information you give them so it’s important to keep them up-to-date about the specific needs, priorities and issues your business is facing or anticipates. Regular update meetings will enable you to do this and ensure they are a partner to your business, not simply a supplier.

(2) Communication is central to success

Defined communication channels and service standards for the entire length of your outsourcing contract should be established and clearly communicated. This should be done no later than the contracting stage and is designed to ensure everyone involved is aware of and understands the aims and impacts of outsourcing for the business, and the formal communication channels that support these.

(3) Measure the impact of outsourcing

If you have invested time to scope the services thoroughly you are outsourcing, and have negotiated a high quality of service standard, you will be in a strong position to assess the value and impact of it on your business. As at every stage of the process remember to work in partnership with your vendor to create and regularly review a set of relevant service indicators – both quantitative and qualitative – to measure, monitor and benchmark performance.

Such KPIs are of high value not only at regular operational service reviews, where they enable you to identify any emerging issues and quickly nip them in the bud, but also at the less frequent strategic business reviews, which are designed to check outsourcing is having the expected impacts and delivering the promised benefits to the business.

Nick Holley from Henley Business School agrees that outsourcing can deliver real business impact and benefit but acknowledges that, like so many business solutions, although the concept is great it can often fall down when it comes to implementation. To make outsourcing implementation a success he recommends three additional key areas to focus on to ensure outsourcing can work for your business.

“The first is to consider the impact of outsourcing on the end user. While it might save central costs it’s important to ask whether it’s adding hidden local costs such as line managers spending more time on administration and are hence diverted from serving customers and motivating people.

“The second area to look at is the quality of the data you can provide your outsourcing partner. Really think whether you have robust, up to date data and clear processes and accountabilities to make outsourcing effective. Finally, ask whether the outsourcer can demonstrate the value they are offering you.”