When Should I Outsource?

By | February 25, 2015

To outsource or not to outsource – that is the question. As an entrepreneur and business owner, it’s fascinating to monitor the growth of my projects, and collaborating with others is always an exciting venture. Whether I am working with a start up, or an established business, the question will always arise at some point – should I outsource and when? 

You have to weigh up the pros and cons of outsourcing, both financial and otherwise. Outsourcing is a solution to a problem, but when misused can cause you a lot of headaches. The most important question is not if you should outsource, but when.

Gone are the days of the ‘lone ranger’ – today with people specialising their skill sets, it’s inevitable that you will need to outsource some of your businesses work. If you own a business, at some point or another, you will meet the outsourcing crossroads. 

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Ask yourself the following when considering to outsource a certain task or role:

  • Is this task routine, wasting time and energy?
  • Is this outside of my central business activities?
  • Would it be cheaper to have someone else do it rather than keep it in-house?
  • Is this draining resources that could be better used elsewhere?
  • Is this standard practice that doesn’t require in-depth, specialised company knowledge?

If you are answering yes, you should start thinking about outsourcing. It can be a great business option for everything from payroll and accounting to delivery and manufacturing. Outsourcing allows you to reallocate and invest your resources into higher ROI activities.

It’s important to note that you shouldn’t be outsourcing functions that are essential to your business profitability – if you are a SME, your personalised Customer Service will be one of your USP’s. You most likely rely on Customer Service to build rapport with your clientele and this is best kept in house. 

Our customers use SmartPayroll because their primary business is not payroll – they don’t want to spend copious amounts of time learning how to pay taxes, adjust annual leave etc. So if there are functions of your business that are secondary to your core business – it may be time to outsource. 

Time to do your Homework

Now that you’ve decided ‘Yes’, I will outsource part of my business activities, its time to do your homework. Ask yourself what exactly are you looking to outsource; What is the role/function? What deliverables do you expect? How often do these tasks need to be achieved? etc. When looking at companies to outsource to, ask them for client references and case studies to ensure they are the right match for you. 

Set your Expectations

You should set a clear standard of what you expect, what is to be achieved and when and how it should be completed, all of which should be outlined in a contractual agreement. This not only helps the outsourcing company get a grasp of your expectations but also helps avoid miscommunication down the road. 

Letting go of Control

To a certain degree, outsourcing means loss of direct control and supervision. This does not mean you are handing over the reigns of your company to someone else, but you now have to let go of total control of certain functionalities. You’ve done your homework, so you should trust whoever you are outsourcing to. 

The Biggest Problem with Communication…

The illusion that it occurred in the first place. It’s important to keep in regular contact with all outsourcing partners, checking up periodically ensures your expectations will be met and valuable information remains transparent. You should schedule reoccurring meetings to stay informed and discuss day-to-day issues. It’s unlikely both parties are going to be able to drop everything for a 5 minute phone call, but scheduling meetings allows you to dedicate time to proper catch ups. 

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