Knowing When it May Be Beneficial for Small Businesses to Outsource Work

Whilst it may appear as if your small business is saving money, handling multiple responsibilities in-house can be both time-consuming and extremely expensive. Granted, you’ve likely decided that the key to business success lies in developing good behaviour. As such, you may see your ability to assume multiple roles and responsibilities as an inherent strength. However, what do you do when those tasks become too much to handle? What do you do when some tasks become too costly to manage in-house? After all, you’re responsible for business development. Doesn’t it just make sense that you focus your efforts elsewhere, instead of rationalising your decision to go it alone? When faced with such a decision, it is important to understand the innumerable benefits of outsourcing. Regardless of whether it includes outsourcing IT, marketing or payroll, there are a number of immediate benefits to choosing an outside firm to handle these day-to-day tasks.

Free Up Valuable Resources: One of the first benefits of outsourcing is how it immediately frees up valuable internal resources. Whether that includes removing timely obstacles for yourself, or your employees, your business is bound to reduce its costs by outsourcing certain redundant and repetitive business functions. You’ll not only reduce your overhead, but you’ll be able to hand over these responsibilities knowing they’ll be managed properly. After all, you’re in the proverbial “driver’s seat.” You are now able to dictate terms of service with your chosen outsourcing firm.

Protect Business Knowledge and Know-How: Your business knowledge is an asset, one that can be stolen, used against you or simply copied. Whilst you may view your employees as loyal and committed to the cause, the reality is that information theft is a going concern for all enterprises. Outsourcing IT reduces the growing concern of theft by protecting confidential and critical data. You’ll be able to upgrade your service capabilities, protect your vital data, and provide remote desktop management to both internal and external customers. Whether that includes providing 24/7 support, or revamping your website with improved online order fulfilment capabilities, outsourcing IT is a cost saving solution that just makes sense.

Reduced Tax Burden: It’s amazing just how many enterprises must cover late, incorrect and incomplete tax filings. Whilst PAYE rules are clearly defined, small businesses still face yearly fines for not properly filling out their returns. However, your small business can immediately eliminate these fines by using an outsourcing firm. In fact, most firms will provide a guarantee that any fees will be reimbursed.

Don’t rationalise your decision to keep these aforementioned business functions in-house. There is an immediate savings to using outside firms, ones who assume full responsibility for a given business function. Reduce your costs and focus on growing your business. In the end, that will not only save you money, but make it easier to grow your enterprise.

Robert Dean has worked in the document shredding business for several years and believes in the importance of data security. He currently works for The Shredding Alliance.

When, What And How To Outsource

If you’re running an expanding small business it can be difficult to know what you can do in-house, and what you should outsource. There are special circumstances for both – what your company actually does, how reliant you are on the service, and what resources and money are available to you – but there are also general rules that can and should be applied when the decision to outsource is made.

When to Outsource

You need to evaluate what you can do effectively and economically in-house first, naturally.

Running a small business eats up a lot of your time. If you find that you’re cutting time and resources from the jobs integral to your business, just so you can do tasks such as bookkeeping and payroll – it’s worth considering outsourcing.

However, when judging the relative value-for-investment returns offered by outsourcing versus in-house work, don’t just include the cost.

The skills your staff have built up while working for you, their familiarity with your business and your needs, and their greater reliability can all be hidden advantages to using in-house services. So even if it works out more expensive to do everything in-house, you might decide that paying a premium for reliability and known quantities is well worth it.

Conversely, you might decide that your staff’s skills make their time more valuable in real terms than the amount you are paying them – so even if a freelancer costs more, your in-house staff could spend their time better.

Finally, make sure that no editing is required. Editing of outsourced writing or coding might take no more than 15 minutes a pop, but it still adds costs on top of costs. Your time, and the time of your employees, is valuable. Be absolutely sure that you factor in the time-cost of editing outsourced work.

outsourcing dilemma
Image by: Robbert van der Steeg.

What to Outsource

The benefits of outsourcing are that you get to shift tasks that may have been sapping a lot of time and a great deal of money from your company simply because your workforce doesn’t have the skills or motivation to perform these tasks quickly and effectively.

Don’t ever outsource something just because it’s not an enjoyable task. You need to consider whether that task is one of the important things that people come to your business for – give that up, and you’ll compromise your standing as a company.

Do, however, consider whether a task is taking longer because your skilled and professional staff are given no motivation to complete it quickly – that doesn’t necessarily mean that you should outsource the task in any case like this, just that it is an option to be looked at.

Outsourcing data entry tasks might be worth it, for instance, if your company’s paid staff are mostly writers, and thus aren’t interested enough in the task to complete it quickly. If there are opportunities within the company related to data entry, however (being in charge of Content Management Systems, for example), you might find that the work gets completed very quickly and efficiently indeed.

There’s little point in punishing staff for completing boring work slowly, though – it’s easier and creates less ill-will to outsource the work to somebody who gets paid more if they work faster and harder!

There are a lot of tasks that make sense for most businesses to outsource because teaching someone the skills required doesn’t make sense given the limited time they’ll be spending on the task.

Bookkeeping and payroll only generally take half a day a week, so there’s little point in training someone in-house specifically to do that. Similarly, there’s hardly any point in hiring an IT guy if your company consists of relatively few computers – it makes more sense to bring in freelancers.

How to Outsource

When you’ve decided what you need to outsource, shop around for the best deal. Think about what packages are on offer, and whether you need to choose someone local or not. Anything where you might need an on-site visit (for example, IT management or office interiors) will need to be local, with say, an hour of where you are based, whereas tasks that only involve digital communication are fine to be based further afield.

It’s not necessarily a good idea to outsource overseas – even though the costs might be compelling, often you get what you pay for, and your service may suffer.

Think of how comprehensive the service needs to be, and don’t be afraid to negotiate on prices and what you think should be included. Many companies offer flexible rates, depending on both the service and the business.

Outsourcing should be utilised to complement your key business objectives. Ideally it should be implemented to allow your skilled workforce to concentrate on their primary role. If this is done correctly, you will see your business grow and achieve success.

Any outsourcing horror stories to share? Great successes? Let us know in the comments!

About the Author: James Duval is an IT-for-business specialist who is addicted to his Xbox. He writes blog posts for Interaction UK London.