Are you currently debating if you should outsource some tasks but are unsure if now is a good time to start? Perhaps your team has been focused on building a program but cannot scale, or your internal team's productivity is hurting due to too many admin tasks. Whatever your reasoning may be, outsourcing the non-core functions of your business is an excellent way to free up your time, lower overhead, and scale your business, but when is it a good time to do so? This article will help break it down for you.
There is no single reason why companies choose outsourcing because the decision depends on a company's needs and context. In the same way, the best time to outsource is different for each firm.
Some businesses have employees to handle day-to-day operations, but they need outside assistance to manage new initiatives that may not require hiring another full-time employee. For others, it may be time to explore outsourcing when you and your current workforce cannot manage your company's day-to-day business and grow it properly.
Although there isn't one formula to knowing when to outsource, be on the lookout for indicators:
It's challenging to run a business for a long time without being creative with your services and products. Entrepreneurship involves innovation. If your organization isn't prepared for innovation, it will have slow growth or even insolvency sooner rather than later. As a result, never let your company's time be wasted on menial tasks. Instead, you can outsource work for a lower price.
Entrepreneurs have long viewed outsourcing as a strategy reserved for large corporations. Still, technological advancements have made it a more accessible tool for small businesses and outsourcing has had a significant impact on the growth, productivity, and bottom lines of some small organizations.
According to the Harvard Business Review, outsourcing non-core business procedures like these can save you 20% to 30% on billing and payments, payrolls, recruitment, and lead generation. Outsourcing also reduces costs because there are fewer employees to pay, and there is less equipment and working space needed, which also means lower utility expenses.
When a team's capacities exceed their limits and initiatives are stalling, it may be time to outsource to keep everyone moving forward. It is critical to be strategic in your approach to this so that morale does not suffer. Before making a final selection, ask your team what their specific needs are and what it would take to achieve their goals promptly.
A startup company can scale too fast without foreseeing problems like not being able to fully meet customer needs and delays in the delivery of products or services. This is an indication that you should outsource specific processes or tasks. Your investment in offshore outsourcing will help you provide services on a larger scale. In the long run, you'll be able to generate more revenue and gain more customers.
If your in-house team lacks the tools or expertise to handle specialized tasks, it's best to outsource the project or function. The last thing you want is to take on a project that you know you won't be able to finish on time. So, if you know you'll need much help to complete a specialized task, outsourcing gives you access to talents and skill sets that will be helpful to your business process.
As a business grows, it's challenging to manage everything in-house. However, when you outsource, you free up time and resources to focus on other aspects of your business while still providing high-quality service to your customers.
When it comes to outsourcing a task, there are two rules. The first is that if anything takes too long for the in-house staff to do, it's probably best to outsource it especially if it happens frequently. The second rule is that if something is highly specialized, it’s better to outsource it to someone who is immersed in the field.
Below are types of tasks to outsource, divided into three categories:
Let's say you need the expertise of a CFO. You could have an outsourced CFO-level professional provide financial analysis and make sure things in the finance or billing department are going smoothly.
You can outsource back-office processes and repetitive tasks like data entry, accounts payable, monthly reports, and shipping inventories.
Information-related work can be outsourced to save on time, costs, and other resources. This type of outsourcing is known as knowledge process outsourcing (KPO), which involves contracting out high-level tasks involving problem-solving or specialized knowledge to an outsourcing company with high subject matter expertise.
For instance, consider IT support for your accounting system or network. Switching to an outsourced supplier with the appropriate skill set when your IT requirements grow is easier because you may not be able to afford or require a full-time IT employee.
Companies that want to compete globally must seek out the most cost-effective and valuable strategies available, and outsourcing ranks high. There are benefits to outsourcing that can be realized regardless of the size of the business and its services. By outsourcing non-core functions, businesses recognize and understand that they can better focus on what their company was founded to do.
In 2009, Rob of eFlexervices outsourced more than 90% of his startup business, AQQIRE, to a team in the Philippines. In 2013, his company was acquired. Due to the success he had with building and managing an offshore team, people in his network reached out to see if they could help replicate the success for their companies. eFlexervices has been helping businesses build teams in the Philippines ever since. Through outsourcing, the goal is to optimize your operations by processing labor-intensive tasks so that your in-house team can focus more on the core business as you continue to scale, while also reducing overhead by upwards of 70%.
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