• Tuesday, June 25, 2024
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BusinessDay

What you are missing without outsourcing

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Most entrepreneurs have great talent 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.”

Those are the words of Laura Lee Sparks, a young entrepreneur who specialises in legal marketing. Outsourcing is a management strategy by which an organisation delegates major, non-core functions to specialised and efficient service providers. It’s true that outsourcing saves money but that is not the only or most important reason you should outsource. As many businesses have discovered, strategic outsourcing offers multiple benefits to organisations and individuals who are outsourcing. These benefits include:

Access to Swift and Skilled Expertise: Most of the time, tasks are outsourced to vendors who specialise in their field. The required skill set may not be a core competency of your business. To allow you to focus on your core mission in providing a high quality product and service to your customer, it makes sense to outsource the task to people who can do it better. In effect, tasks can be completed faster and with better quality output. Also, a good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments, the start-up process can be even more difficult.

Focus on core activities: Workload increases with additional non-core functions and the quality of your core activities suffers as your business grows. Outsourcing to a third party plays an important role by allowing your key resources to focus on primary business tasks. This way, the organisation is allowed to concentrate on and strengthen their core business process. Moreover, every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from minor activities towards work that serves the customer, and it can help managers set their priorities more clearly. Outsourcing your business processes would free your energies and enable you to focus on building your brand, invest in research and development and move on to providing higher value added services.

Reduce/ Manage Risk: Every business investment carries a certain amount of risks; markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing helps the organisation to shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist, they plan your risk-mitigating factors better. Outsourcing will allow you to share any associated risks with your outsourcing partners thereby reducing your burden. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

Reduce Operational and Recruitment costs: Cost-cutting may not be the only reason to outsource, but it’s certainly a major factor. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures. When you outsource services like customer service, bank tellers, call centre, etc., you are getting access to quality services that are offered at a much lower cost. Outsourcing also eliminates the need to hire individuals in-house; hence recruitment costs can be minimised to a great extent. Hiring and training staff for short-term or peripheral projects can be very expensive and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most. This is one of the prime advantages of outsourcing.

Increase In-house Efficiency: After you allocate tasks to your outsourcing partner, they share the workload of your employees. This allows you to develop your internal task force and use them more efficiently. When you outsource your business needs to an outsourcing partner, they bring years of experience in business practices and expertise in delivering complex outsourcing projects. Thus, they can do the job better with their knowledge and understanding of the domain. This leads to an increase in productivity and efficiency in the process thereby contributing to the bottom-line of your company.

Now you know why you should outsource!

Bolaji Olagunju