Why Outsourcing Can Be a Game Changer for a Growing Business
As a business owner, growing your business will always be at the top of mind even if you are an industry leader. To that end, finding ways to cut costs while also improving your revenue, for the purpose of benefiting your bottom line, should be a priority. One of the best ways to accomplish this is to outsource certain aspects of work to professional firms who can take that work off your hands. Learn everything there is to know about outsourcing and the benefits it can offer to a business.
What is Outsourcing?
For those who have never heard the term, outsourcing refers to obtaining goods or services from an outside or foreign supplier, rather than producing that item internally. Generally, outsourcing is a contract between two companies in which one is responsible for completing tasks, whether that be production, procurement, or something else, within a set amount of time.
Outsourcing can either be for a single task, such as hiring a freelancer for marketing, or it can be for a major project, such as securing oil and gas technical services when setting up your business. In most cases, outsourcing is used as a cost-cutting measure as opposed to hiring internal employees for completing the task.
Benefits of Outsourcing
When considering outsourcing work within an organization, there are a number of key benefits that could help in the decision-making process:
- Increased efficiency in the work being performed
- Greater competitive advantage over other organizations
- Controlled and fixed costs per project
- The ability to focus more on core business activities
- Reduced overall labor costs stemming from not needing to hire new full-time employees
Drawbacks of Outsourcing
However, for all of the above benefits, there are certain drawbacks to outsourcing that a business should keep in mind:
- Less control over the work that is being performed
- Potentially negative impact on staff who believed they could handle the project
- Data privacy and confidentiality risks
- Less flexibility over project details
- A potential lack of consistency with work that is produced
Commonly Outsourced Aspects of a Business
Beyond looking at the above benefits and drawbacks to outsourcing tasks within a business, it can be helpful to look at commonly outsourced areas of businesses. Some of the most common business divisions where outsourcing is seen include:
- Marketing firms used for the purpose of advertising and marketing services for a product
- IT and programming firms used for developing code and digital business processes
- Tax firms handling financial documents prior to business tax season
- Research and development firms taking over product development for future updates
- Writers being used for digital content on websites
- Customer support firms being used to direct calls meant for an organization
While all of the above are the most common forms of outsourcing, there really is not shortage of ways in which a business can outsource their tasks.
How to Combine Business Growth with Outsourcing
As you start to grow your business over time, you will need to reevaluate your budget and production capabilities. If your growth is explosive, you may not have the resources on hand that are needed to meet consumer demand. Balance outsourcing work with your current production capabilities in order to maximize your growth.
On top of this, identify the specific skills that your employees have. All business owners should be proud of their employees, but they should also know their limits. When your employees may be out of their depth on a project, consider outsourcing the task to experts who have industry experience.
5 Reasons Your Business Should Consider Outsourcing
With all of the above taken into account, there are five primary reasons to consider outsourcing work within your organization. While some of the following reasons may not be applicable to your business specifically, you may still be able to receive partial benefits:
1. You retain flexibility with your staffing
Perhaps one of the biggest benefits of outsourcing is the ability to change your staffing levels. Based on the nature of your business, it’s entirely possible that you may not need the same type of employee year-round. In this situation, outsourcing the work instead of hiring someone full-time who will only work half the year may be a good choice.
2. You can find subject matter experts in specific fields
One of the largest benefits of outsourcing is the fact that you are hiring subject matter experts with industry experience in whatever project you hire them for. This means you don’t need to worry about training them up and are getting the equivalent of experienced employees right off the bat.
3. You can enhance the speed of your business growth
Growing your business by yourself and a handful of employees will naturally be a challenge. In the early stages of business development, however, outsourcing work can be a smart way to get marketing and product development tasks handled faster than they would be in-house.
4. You can ensure you are in compliance with industry regulations
Whether you are just starting your business or are established in your field, you are bound to have industry regulations and compliance issues that you need to follow. Understanding the nuances of these items can be difficult, such as with business taxes, but outsourcing the project to a firm in the field can ensure you are in compliance.
5. You can reduce overall labor costs
Finally, outsourcing work allows a business to reduce overall labor costs. After all, partnering with a firm for a project will not be free, but it will be a fixed fee that will often be far less than an employee’s salary.
The Bottom Line
Whether you are already outsourcing a portion of the work within your organization or are considering outsourcing your first item, there are no shortage of ways in which outsourcing can help. To grow your business, you need to recognize your strengths, but also your shortcomings. Outsourcing can allow accredited professionals to handle specific tasks within your organization that you may not have the capability of performing yourself.