Outsourcing

Why Outsourcing Makes Sense

Outsourcing makes fiscal sense. Farming out a particular function where you lack expertise is a smart move. Temp agencies have the expertise you need for hire, for a period you control, and these firms employ experts in their field which you are renting for a set fee.

Outsourcing makes sense from a time management view. If you can free the time you’ve been investing, by you or that of staffers who have been performing these tasks in addition to several others, then you can free your time to concentrate more on doing what you do best. What’s needed is an honest assessment of your company strengths and weaknesses, including your own.

Manufacturing costs can be reduced through outsourcing to a firm that specializes in manufacturing. You have to decide if you can maintain product quality.

Deciding What To Outsource

To make an informed decision, you must know the strengths and weaknesses of your various departments and how much each is costing you to perform, compared to how much it will cost to outsource. Outsourcing is not always a popular decision to make, considering the bad press it has had of late, with public opinion based on a perception that outsourcing demeans the quality of a business, especially in customer service or technical support areas. In a large part, this is very true. But not all subcontracting is farmed out to overseas locations. The majority is subcontracted to firms in the U.S. who specialize in one or several areas.

In fact nearly every department you now have can benefit from some form of outsourcing, and you’ll benefit from the reduced costs and increased efficiency. But there will always be tasks that you enjoy doing, and can do a much better job of performing, because you and your staff know your business so well and work successfully as a team. If that’s the case, keep these tasks and consider outsourcing the rest.

Some of the tasks you can outsource include:

Accounting and bookkeeping

This is an idea area where the small business entrepreneur usually lacks the most knowledge and skill. Rather than spending the time to gain the knowledge needed and constantly update on changing tax laws, outsourcing these functions makes sense. You can outsource all of these tasks to one firm, or partial out functions of each to several other small business firms.

Human Resources

This function will depend upon the growth of your business. The larger you become, the more complicated the human resources functions become. The requirements for human resources are constantly changing. Your firm will have to develop hiring procedures, employee manuals, payroll information and employee training, not only on human resources issues, but social areas including ethics and sexual harassment.

Manufacturing

Manufacturing is an expensive process and overseeing it isn’t always the preferred task of creative individuals more interested in product development or marketing. The tasks of manufacturing is perceived by these entrepreneurs as time consuming and boring. If that’s the case, you‘re better off subcontracting these processes. Outsourcing some of your manufacturing process does offer you reduced costs. You won’t have to maintain an inventory of raw materials, store inventory or hire manufacturing employees.

Sales

You can subcontract your sales services, and avoid associated costs, including operating a costly phone system, maintaining a customer database, computing employee salaries, commissions, sales tracking and payroll. But subcontracting sales operations is a risky thing to do, because you can’t properly motivate an external sales team to sell if you have little contact with them. Entrepreneurs know that Business Sales is the lifeblood of any business. Enthusiasm and product knowledge are keys to successful sales. If you have any doubts about this aspect of outsourcing, it’s better to maintain an in-house sales staff who can have a better pulse on your business.