There are many benefits to outsourcing certain operations of your business. It can save you money, time and resources. That’s if you do it right though. Outsourcing can also be a source of frustration.
Outsourcing need not be a gamble, however. If you go about it the right way there is no reason you shouldn’t reap the rewards. Make sure you consider the following points to that you make the right decision regarding your business’ outsourcing needs.
Are you trying to save money?
Reducing costs is one of the main reasons to outsource. Sometimes it simply works out cheaper to outsource a particular operation, than to employ individuals or fund the department needed to do it in-house.
However, the aim isn’t always to save money. Sometimes outsourcing might cost you more than bringing it in-house, but it frees up other resources, such as time and personnel that are better utilised elsewhere. Sometimes, it is just easier to outsource a complicated procedure then try to acquire the skills yourself.
Either way, it is important that you are clear about why it is you are outsourcing. If it is to save money, then draw up a budget and make sure that this decision is worth it. If you have another objective in mind, make sure that it is worth the cost.
What are you outsourcing?
The general principle with outsourcing is that you only outsource your non-core business processes, in other words your nonessential functions. For example, if you are a freelance writer, you wouldn’t outsource the actual writing! However, if you started an import/export business, it would make sense to outsource your fleet management, especially at first.
This is a simple enough concept, but there actually have been instances where business did indeed outsource their core tasks, and did so successfully. This particular example helps to illustrate a successful example of shrew outsourcing:
Zalmi Duchman’s catering company, The Fresh Diet, at one point outsourced the actual food-making component. This isn’t that ludicrous. It gave his team the freedom to concentrate on sales and marketing, and during this time, the business grew by 400%.
Note, however, that this is more an exception to the rule than the rule itself. While it can be beneficial to outsource core tasks to focus more on administration and co-ordination, in general you would keep it in-house and outsource secondary processes.
Can you control quality?
If you are going to outsource, one of the key points to consider is the quality of the work. It goes without saying that you should check out the quality of your potential supplier beforehand, but it is more than that. Will you be able to monitor the quality afterwards as well?
Remember, if you are outsourcing to a third party and it causes a problem of quality with your service or product, you can’t very well say to your client that it’s not your fault and therefore not your issue.
Going back to The Fresh Diet catering company as an example, although outsourcing the food preparation proved so successful, after a while Duchman brought it in-house again. He realised he would have to take back control of the kitchen if he wanted the business to grow, so that they could adapt the recipe however they wanted and better monitor the quality of the food.
What are the risks?
Before embarking on a partnership with a supplier, make sure you consider all the risks involved. For instance, and perhaps most importantly, there is the loss of control you have over what is being outsourced. How much could go wrong? Will you be able to fix the situation should your supplier fail to bring up their end? You need to employ a service provider you can trust and foster open communication with at all times, but it is also good to plan for the worst case scenarios.
Don’t let the potential risks turn you away from the idea though. Just look at your business’ unique situation carefully. Ultimately, you need to weigh up the advantages and disadvantages and figure out the right answer for your needs.