How to get outsourcing right

Outsourcing can be a one-way ticket to a better business – but only if you get it right. Just as endless organizations have discovered the huge financial and productivity gains to be made by assigning ongoing tasks or one-off projects to specialist providers, there are those that have failed to realize its true benefits or been burned by the experience. There is no doubt outsourcing has the power to improve or even transform business processes and balance sheets but, like any decision, it requires an investment in time and research to ensure the best chance of success.

Whether you are diving into the outsourcing pool for the first time or keen to make changes to your current arrangements to avoid becoming a failure story, these are the key questions to consider when developing your outsourcing strategy.

To outsource or not?

It seems obvious but you would be surprised by how many executives and managers rush to outsource without truly weighing up if it is the best option for their individual situation. With so many stories of organizations reaping the rewards, it is little wonder some newcomers rush to embrace the practice but many outsourced teams fail due to a lack of proper due diligence. Rather than believing outsourcing is a silver bullet that can solve all business issues from day one – lower costs, better quality, more flexibility – it is better to initially focus on the one benefit that will have the most positive impact and pursue other benefits later. The only thing worse than not outsourcing is rolling out a poor outsourcing strategy and that is why you should take the time to consider your true motivations for doing so.

When should you outsource?

With countless tasks now able to be assigned to third parties, there has never been greater potential for organizations to pursue outsourcing. However, the flipside is there has never been a time when more organizations outsource work unnecessarily. A golden rule is that you should never outsource your core business functions. The thing that makes your organization special should always remain in your hands, with functions that are stressful, tedious, time-consuming or expensive to handle in-house better options for outsourcing. If you or your team do not have the resources, knowledge or skills to do a task well, it may be time to outsource. If you or your team face a task with dread instead of excitement, it may be time to outsource. If you or your team are awesome at a specific task, it may be time to outsource other work to free up more time to do what you do best.

What can be outsourced?

The simple answer is that you can outsource nearly any type of role, as long as it does not require localized knowledge or a physical presence onshore. If you have systems and processes in place and the role can be done remotely/virtually, it can be outsourced offshore and you can get highly skilled workers at a fraction of the price you would have to pay their onshore counterparts. In more specific terms, here is a variety of the most in-demand business tasks that are ideally suited to outsourcing.

• Administration: the never-ending innovation of technology, faster internet and connectivity speeds and boom in cloud services has created the perfect environment for administrative outsourcing. Studies have found that U.S. employees at large-sized companies only spend 45% of their time on primary job duties, with up to 40% of their workdays ‘wasted’ on the likes of administrative tasks, meetings and ‘interruptions’. Now imagine the benefits to be gained if much of those admin tasks were outsourced to an expert provider that charges far less for their time than you charge for yours. Data entry, payment process and calendar management are just a few of the administrative tasks waiting to be tackled by outsourcing providers.
• Bookkeeping/Accounting: while the presence of an in-house financial wizard would be great in a perfect world, the reality is they are a very costly resource in this one. Fortunately, functions such as bookkeeping, invoicing, financial reporting and accounts payable and receivable are increasingly being outsourced thanks to advancements in technology. Cloud-based accounting software such as Xero has made sharing of documents and data easier and more secure than ever, with quality outsourcing providers boasting a wealth of talented and highly efficient employees and teams capable of saving companies considerable time and money in the field of managing money.
• Technology/IT: in an increasingly technological world, outsourcing providers have proven a godsend for organizations of all shapes and sizes. No matter how tech savvy you may be, the simple fact is it is often far more efficient and cost-effective to assign such responsibilities to a third-party expert. Learning how to code an app, migrate to the cloud or finetune a website is just not worth the time and expense when there is an abundance of talented people ready and waiting to deliver at a fraction of the cost. Outsourcing providers are also highly proficient at developing and deploying strong cybersecurity measures to ease the risk and burden associated with hackers and cyber criminals.
• Human Resources/Recruitment: while growth is great for any organization, it brings with it added HR responsibilities. Every time you recruit a new staff member, there is a proportionate increase in your human resource obligations and failing to adequately address them can prove costly in the long-term. By outsourcing tasks such as recruitment, payroll and performance management to experts in the field, you are guaranteed to not only avoid the financial toll of doing so in-house but also ensure you have more time to dedicate to your specific areas of expertise.
• Digital Marketing: there has never been a greater need to develop a comprehensive digital marketing strategy and that is set to only grow in coming years. Rather than spend your days (and nights) trying to navigate what is a highly complex and technical field, outsourcing providers can tap into a pool of skilled marketing staff that not only live and breathe the subject but are paid far less than their in-house counterparts. From developing quality written content and email campaigns to social media marketing and search engine optimization, outsourcing provides companies with a golden opportunity to improve results at the same time as saving costs.

What tasks are not suited to outsourcing?

While the array of tasks that can be outsourced continues to soar, businesses need to be mindful of rushing to hand certain responsibilities to external parties.

• Core competencies: as previously mentioned, successful businesses not only know what they do best but pride themselves on doing it. Keeping one’s core competencies in-house is a must and while it is acceptable to seek external support when needed, do not risk devaluing the very thing that defines your business.
• Company culture: handing the enhancement of company culture to a third party is a short-cut that should not be taken. The people within an organization know it best and are the ones who should be responsible for exploring and working to improve that intangible force that can go a long way to ensuring not only a happy workplace but a successful one.
• Termination: letting a staff member go is never an easy or enjoyable task but that does not mean it should be tasked to an outsider. While it is acceptable to seek advice or guidance from external operators, avoiding the difficult conversations yourself runs the risk of causing a loss of respect from both the terminated and the colleagues that remain, which in turn can erode the all-important company culture mentioned above.

How important are in-house champions?

In a word – crucial. While outsourcing is undoubtedly smart business, the concept can be difficult for some staff members to initially negotiate. For that reason, it is hugely beneficial to identify key players within your organization – from executives and managers to rank-and-file staffers – who can be advocates or voices of support. Many outsourcing ventures have stumbled, if not failed, because in-house teams have not embraced the concept and getting the right people on-board at the right time is an important step to getting outsourcing right.

It should now be clear that task outsourcing is not a one-size-fits-all option. Developing and deploying a successful outsourcing strategy takes time, commitment and effort, with organizations needing to be mindful of what makes them unique, the tasks best suited to third-party support and the steps they should follow to make their outsourcing journey a successful one. It should not be undertaken lightly but when done well can deliver huge rewards.

If you are considering outsourcing, this eBook provides further information about how to ensure success including the four different offshore models, how much your business can save and why you should consider the Philippines as your offshore destination.