Outsourcing: Pros and Cons

July 30, 20158:58 am1270 views

Outsourcing has become a big deal in our economy. We have long seen outsourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small businesses–and for some small firms, outsourcing has made a powerful impact on their growth, productivity and bottom lines.

Well, is outsourcing really a good way to grow the company?

Pros

When deciding what to outsource, some things (legal services, printing, health insurance, etc.) are fairly obvious, and most businesses outsource them. Some functions are a bit less obvious, and people opt to outsource these task depending on their personal expertise.

For every company, the right time to outsource is different. Some businesses have in-house staff to handle daily activities, but may need outside help to undertake new projects that don’t warrant another full-time employee. When you and your current employees are unable to manage the day-to-day business of your company and build the business satisfactorily, it may be time to consider outsourcing.

Chances are you are already outsourcing some business tasks, such as payroll administration or background and criminal checks for employment. These days, almost any task can be outsourced, with so many qualified professionals leaving the corporate world to work as freelancers or contractors.

The types of tasks that are best outsourced fall into three general categories:

  • Highly skilled, or executive, expertise

For example, you may not need to pay a CFO’s salary, but you could have a CFO-level person to come in a few times each month to provide financial analysis and ensure that the bookkeeper is handling the books well, Landers says.

  • Highly repetitive tasks

Accounts payable, data entry and shipping inventory could fall into this category.

  • Specialised knowledge

An example might be the IT support for your accounting system or your network, as you may not be able to afford or need a full-time IT person, and it is easier to change to an outsourced provider with the right skill set as your IT needs change.

See: 6 Reasons Companies Outsource Recruiting

Cons

There are some crucial aspects of your business you should probably not outsource. Just because you can outsource a task doesn’t mean you should. You need to keep an eye on them at all times. These include cash-flow management and, in many cases, customer interaction.

While outsourcing can yield great advantages for a small company, it is not without challenges. If you choose to work with offshore providers, language barriers and time zones can be difficult to deal with.

As you hire a new employee, there are security risks involved when handing tasks over to an outsourced provider. The challenge is to outsource functionality securely, in a manner that does not put employee personal information or customer data at risk.

Bottom line

Although there are risks, outsourcing ultimately offers the company great advantages. The process allows you to build a team of skilled professionals without adding the expense of full-time employees, and to avoid getting bogged down with tasks that can be completed without your attention. It is an affordable, proven strategy for growing your business without letting it take over your life.

When you outsource, you can focus your time, attention and resources on your company’s core competencies–and spend your time setting new goals and finding ways to achieve them.

See also: Knowing when to outsource your HR

Source: Entrepreneur