Should I outsource?

The benefits of outsourcing can be substantial. Aside from cost savings, there are other gains your business can make. You need to consider the following:

  • Will outsourcing free up your business to focus on its strengths? This might produce tangible benefits, allowing your staff to concentrate on their main tasks and on the business’ future strategy.
  • Will it improve your efficiency or customer service? The outsourcing company you choose should be a specialist in the process or service you ask them to carry out for you. 
  • Will your business gain a competitive advantage by outsourcing? Outsourcing can bring flexibility to a business, turning fixed costs into variable costs and freeing up capital. It can also give your business the edge when adapting to changing market conditions.

Consider your options

It may be tempting to rush into outsourcing, but take the time to think through what you need and set the terms and find the right service provider. Consider the following:

  • Which are your core strengths and which are secondary? Which processes are you thinking of outsourcing and why?
  • What are the costs of doing it in-house? Include hidden costs such as office space and staff costs.
  • Check the return on investment (ROI) – ask potential service providers for help, as many offer an ROI calculator.
  • Would it be helpful to use a consultant to help you find a service provider?
  • What are the costs of not outsourcing? Will your business suffer because it cannot afford to invest in the expertise or the facilities that an outsourcing partner might provide?

When looking at outsourcing, you should also ask yourself:

  • Are you prepared to spend the time and energy required to manage the outsourcing relationship?
  • Are your expectations realistic?
  • Is the function a key task which your business needs to control directly to ensure its future competitiveness?

Finally, weigh up the risks of outsourcing against those of keeping the processes in-house.

Source: Business Link

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