Just the word “outsource” carries a lot of weight. Whether you hear it as part of a political ad or in the pub, it can mean a lot of different things to different people. “Outsourcing” is more than just a political buzzword though, it’s a choice that could make or break your company. Business owners have enough on their plates these days without adding the task of outsourcing to the mix. We can all think of the immediate benefits that outsourcing can bring to your business, but it’s not always easy to see the potential drawbacks. So in this article, I will explore the pros and cons of outsourcing to see if it’s right for your company.
4 Benefits of Outsourcing your Business Process
Outsourcing a large or small part of your business can reap huge benefits for your investment, as long as you are able to make well-informed outsourcing decisions.
Business process Outsourcing Cut Costs
You can send specific tasks to another company that specializes in that particular area and this can save you lots on your bottom line and enable your employees to concentrate on their areas of expertise. For example: If you’re a small or medium sized company, you don’t want to spend an inordinate amount of time cleaning the office, or hiring someone full-time to clean. Hire a local cleaning company to help offset costs, and you get somebody that you don’t have to keep full-time or train.
Outsourcing Saves Time
You can start new projects, or develop more areas of focus quickly by outsourcing complicated, repetitive tasks. Just drop the outsourced projects on the right companies and they will be up and running immediately without you having to take the time to train your staff in a new area of expertise. The outsourced companies are already experts in their field so take advantage of the work they’ve already put into developing their skills.
Outsourcing helps you Focus
Outsourcing will free you and your staff up in order to pin the focus on your main goals as a business. Not getting bogged down with trivial, day to day tasks can be worth more than anything an outsourcing company can charge.
Yes, outsourcing can be an incredible source of continued education for your employees. With in-house outsourcing you can bring in experts to help with a project that is beyond your employees’ current skill level. That in-house outsourced team can train your employees while providing the work that you need in order to complete your project on time. Your employees then can take over from the outsourced team and continue on with a new, valuable skillset.
3 Drawbacks of Business Process Outsourcing
If you’re outsourcing, it can be viewed in a negative light. This can be especially true if you are permanently outsourcing jobs overseas. This stigma can be overcome, but only if you play your outsourcing hand very carefully. Balance your outsourcing priorities by ask yourself:
“Does this task really need to be done by another company, or would it be good to invest money now for it to pay off later?
If you strike this balance and you have a great PR person, then you can successfully outsource without damaging your public face. Also, too much outsourcing has the potential to negatively impact the morale of your workforce. If you outsource too much, then your workers can’t help but think:
“Will my job be next?”
Loss of Managerial Control
When you send the work to another company, you also send the control as well. Sure, you have contracts, but you can’t necessarily make a lot of demands on how work gets accomplished, how soon, or many other fine-tuning tweaks that you would normally make for company’s own work. This can be a huge-drawback if you decide to outsource things that require a high degree of specialization, as opposed to outsourcing simple data entry or cleaning.
If something goes wrong, or the project isn’t done in the manner you’ve intended and you’re on deadline to get it delivered to your customers, then you’re still on the hook. Your customers won’t care that it was the outsourced company’s fault that you couldn’t deliver the project on time. They will hold you accountable. Any failure in communication or scope of purpose between you and the outsourced company can lead to huge financial impacts, let alone the impact to your credibility with customers.
In conclusion, while the benefits of outsourcing may outweigh the risks, the risks can be significant. As a business owner, you should absolutely educate yourself as much as possible on exactly the types of outsourcing you want to do and the impact it will have on your company. Thoroughly research the outsourcing companies you are considering. Talk to other business owners who have used their services. Find out exactly what you will be getting into before you invest in outsourcing. A successful outsourcing partnership can be fruitful for everyone involved. Before you make the choice to outsource, choose to get informed.
About the Author: Randall Gates is a business professional who specializes in quality management systems and software. He frequently writes on these topics and currently blogs for cebos.com, a provider of compliance management software.