How to know if outsourcing is right for your business

Outsourcing is a solution that more and more businesses are turning to today and it's not hard to see why. Outsourcing can save your business a considerable amount of money by enabling you to focus on your core activities, rather than spending your time on elements of your company that do not directly relate to your bottom line.

However, outsourcing is only effective if you outsource the right pieces of your business. If you outsource tasks that would be better kept in-house, you could end up having an adverse effect on the success of your business.

I've had this debate with myself many times and even though I've always determined it would be better to hand off certain aspects of my business, I haven't yet made the leap for various reasons. 

But when the time is right, I know I am better off to let others do what they do best so I can do what I do best too. If you're in the same boat as me, or ready to start outsourcing, these key questions will help you determine what to outsource first.

business outsourcing business strategy

Will you save money by outsourcing?

There is only one place to begin, and this is by looking at the financial side of things. Most business owners think about outsourcing because they are looking for ways to cut their costs, and so you need to make sure that this is actually going to be the case. However, when working out the costs, you must take a full view of all expenses to get a realistic picture. Do not merely look at the initial expenses; consider the full costs over the period of a year. This will give you a true understanding as to whether handling a task in-house or outsourcing is going to be the most cost-effective solution.

Is the activity operational or creative?

The answer to this question will not fully determine whether you should outsource something or not, but it is worth considering. This is because operational products are a lot easier to outsource. This includes the likes of reservation systems and process automation. These tasks tend to be big yet mundane, and they can easily be outsourced to an outside company. Creative products aren’t as easily outsourced. Examples include consumer games, architectural rendering, and chip design programs. This does not mean they should never be outsourced, though. The remaining questions in this blog post should help to give you further clarity on that.

Is the task in question a core business activity or a time drainer?

The next factor that comes into account when making your decision is whether the activity is part of your core business, or whether it is something you need to do, yet it does not add to your bottom line. For example, if you run a marketing agency, then anything to do with marketing, acquiring clients, and generating profit is a core activity. However, bookkeeping is not a core activity, and this may be taking up a lot of your time – time that would be better spent on marketing and customer related activities.

Would you benefit from a more specialist service?

Unless your business has expertise in the field in question, to handle everything in-house would either mean a dip in quality or a substantial investment in personnel, training, and resources. The latter is simply not feasible and unnecessary if it does not relate to the core of your business. For example, if you run an accounting company for small businesses, are you really going to spend money developing your own IT and tech support department? You would be much better off looking for an outside solution like IT managed services provider Eberly Systems LLC. By doing this, you can have complete peace of mind that all of your IT and tech requirements are being handled by experts in the field. Not only will you get their experience, but they will have specialist software and equipment as well. When it comes to something as pivotal as IT, which could mean huge downtime for your business if something goes wrong, it is definitely better to leave this in the hands of an expert firm rather than trying to take it on board yourself.

How often do you need someone to carry out the task in question?

The next factor you need to consider is how often you are going to need the task in question. For example, if this is something you only need a few days per month, you may be better off outsourcing, as you are going to end up spending more money on the time your employee isn’t working than is working if you keep things in-house. Any type of seasonal work or one-off project is usually better outsourced due to the nature of the work.

Will outsourcing impact the control of your core competency?

Last but not least, you should never outsource your competency. For example, if you have developed software that is unlike anything else on the market and is your company’s secret ingredient that enables you to operate smarter and more efficiently than anyone else, do not entrust this software to outsiders. This is like giving up control of your business. You should never outsource if it is going to compromise your current position; it should only be done to strengthen your position.

Hopefully, by asking yourself the questions presented above, you should find it easier to determine whether or not outsourcing is the right move for your business. While there are some exceptions, the vast majority of businesses will benefit from outsourcing to some degree. However, you need to make sure you are outsourcing the right elements of your business if you are to experience the true advantages of this.

 

This post was done in collaboration and may contain affiliate links.