Outsourcing has a bad rep, but it shouldn’t! It isn’t the four-letter-word that it used to be anymore, but it still isn’t for everyone. Learn more about its benefits and detriments in this post and see if it will work for your company.
How Much Does It Cost to Outsource?
Often the most frequently asked question in regards to outsourcing, and even more frequently the largest variable. It is shown to be significantly less expensive than hiring a new employee for a specific job role. You don’t have to pay salaries, insurance, time off, or for training of new staff. Instead you have an anticipated fee (whether that be hourly, monthly, or yearly,) that you only pay when you need services.
When Should I Outsource?
The right time to outsource is different for every company. Some businesses have in-house staff to handle day-to-day activities, but may need assistant with larger projects like an integration of systems or a new website design.
If you are a smaller business, however – less than 50 employees – it’s better (and easier) to outsource more difficult tasks at first. Consider subcontracting your bookkeeping, social media management, or payroll. Larger businesses are able to manage longer without the need to outsource certain projects.
What Should I Outsource?
Nowadays, just about anything can be outsourced. You may not think about it, but you’re likely outsourcing some of your tasks right now. For example, running a background check on a new hire can be considered outsourcing. Paying someone to design a logo for your business is outsourcing. Having that lunch catered by a local company? Yup. You guessed it. Outsourcing.
That isn’t a green light for you to outsource tasks you don’t want to do just because you don’t want to do it. Some of them are critical to your business and aren’t worth saving a couple dollars for. Things like research and development or talent management really need to be done in-house.
Pros and Cons of Outsourcing
Leveraging the talents of others who may live beyond our borders provides a number of advantages. Some of the pros of outsourcing include:
- Reduces operating costs, resulting in better margins for your company
- It lets you focus on other aspects of your business
- The outsourced company has the technical expertise and equipment to get the job done
Unfortunately, no one solution is perfect. There are a few concerns that can arise from outsourcing parts of your company, as well:
- Priorities may be shared between companies; depending on how many clients the company has you may not get complete attention constantly
- Critics argue that an outside vendor will never be as effective as a full-time employee who is under the same management as other employees.
- It may affect employee morale. If you are letting employees go or downsizing, they can fear their jobs are in jeopardy.
Before committing to a company, make sure your own staff is fully aware of all of the changes that are coming. Transparency is a key factor for a successful outsourcing project.
Most entrepreneurs have great talents but many times they think they can do it all. That can really stall the growth of the business. By outsourcing the day to day back-office tasks, the business owner has more time to focus on generating income."
- Laura Lee Sparks, Owner, Legal Marketing Maven
Is Outsourcing the Same as Offshoring?
No! Outsourcing is quite simply the action of having another company do some work for you rather than you hiring someone to do it internally. While offshoring is a form of outsourcing, it isn’t always done overseas. It could even be to someone in the suite next to your office. You need to be sure to know the difference between offshoring and outsourcing before committing to a project: Offshoring means getting work done in a different country. Outsourcing refers to contracting work out to an external organization.
Find the Right Contractor
Before you allow a new company to take the reins you need to make sure they’re the right fit for you, your company, and your employees. Simple things like word of mouth reviews aren’t good enough! You’ll need to do a bit of sleuthing to make sure they’re a credible source, stable, and have a well-built database of established customers. It also doesn’t hurt to weigh your options by “dating” a few different companies before popping the question.
Should I Hire Someone Instead of Outsource?
Depends. What’s the project? Is it intended to be a year-long engagement, a six-week project, or a permanent fixture in your company? Will your company’s needs fluctuate? If you’re still on the fence on which would be a better solution for your company, download our free Go-To IT Staffing Checklist. The intensive, 12-page checklist includes options for repurposing, staffing, outsourcing, and contracting workers.