Things to know before outsourcing: Small business and startups
“Outsource”
Verb – /aʊtˈsɔːs/, obtain (goods or a service) by contract from an outside supplier.
There are several factors because of which a company would consider outsourcing a part of their business. Some of them are to save costs, save time, reach experts, and provide a great customer experience.
Outsourcing provides many advantages to your business, but there are some components that can produce negative results if you don’t examine it beforehand.
In this blog, we’ll dive deep into the obstacles you may face after outsourcing your business. We’ll also analyze what can be done in advance to make sure that outsourcing provides you with the benefits that you desire.
1. Complications in control:
There can be scenarios like the hiring process, and the managerial conduct not being entirely visible to you. You will have no other option than to agree with the standards and values of your outsourcing partner. Such situations can complicate the functioning of your business.
So, before finishing up the contract, make sure that your partner offers high visibility on your team.
2. Communication issues:
3. Problems with quality:
Quality is the foremost concern in any business. You may face several complicated scenarios if your partner isn’t able to provide the quality of work that an in-house team would’ve accomplished. This can result in unpleasant customer experience, diminished brand reputation, and loss of revenue.
You’ll have to set performance indicators which the outsourcing company will be mandated to achieve, so the quality isn’t compromised in any case.
4. Security and confidentiality:
Data security is crucial. If your data is compromised, it can negatively impact your business.
You’ll have to make sure the outsourcing company takes the necessary measures to keep your data secure.
Measures including but not limited to:
- Confidentiality agreement with the employee.
- Firewalls and Anti-Malware software.
- Protected Systems.
- Detection of security breaches.
- Strict rules on external drives.
- Guarded workplace(s).
- Limited access of data to the employee(s).
- Restricted print permissions, and restriction on external electronic device(s).
5. Impact on company culture:
Company culture is a treasure for every business as it defines the company. A company culture consists of a work environment, company’s mission, value, ethics, expectations, and goals.
Make sure that the outsourcing company is not too unyielding. If you treat your off-site employees as your own in-house employees and not as contractual workers, it can be easy for them to share ideas and feedback that may be vital for your business growth.
Another problem is that your in-house employees may feel insecure about their job when you outsource your business. Make sure to let them know that their job is not at risk.
What are the benefits of outsourcing?
Now that we covered the negative side of outsourcing and how to overcome the obstacles, let’s discuss the benefits that outsourcing brings you.
Management guru, Tom Peters once said:
“Do what you do best and outsource the rest.”
1. Decreased capital and labor cost:
When an infrastructural capacity reaches its limit, you have to expand your area to fit more people while scaling your in-house team. This adds an expense to the company’s budget. However, when you leverage outsourcing, your outsourcing partner will be responsible for those infrastructural requirements.
Besides that, the remote employee will cost you significantly less than hiring an in-house employee. This will lower your expenses, and you can spend the saved money on other core aspects of your business.
2. Access to the experienced and qualified workforce:
While building an in-house team, you can only search for talent in the area where your workplace resides. In many developed countries, there is often a shortage of specialized workers. If there is no shortage, then the employees are pricey. With outsourcing, you will be able to access a vast region of talent at lower costs.
“The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it.”
–Alphonso Jackson
3. Increased speed and quality:
Psychological Researchers say that humans are not only bad at multitasking, but “multitasking is impossible.” When you think you are multitasking, you’re actually switching between the tasks very fast and not cheating the time at all. Handling several tasks at the same time is prone to errors. The key to overcoming this is an increased headcount.
Outsourcing functions as an extension to your team so you can distribute tasks easily and get it done in a better and a rapid way.
4. A velvet customer experience (Customer service):
A customer wants a swift service. If you aren’t able to address your customers at their earliest convenience, it may result in customer frustration. On the contrary, if you are able to address your customers promptly, it will result in the customer trusting you as their personal brand. When you outsource your customer service, you will have a team specifically focusing on your customers. This way, no queries will go unaddressed for a long time.
5. 24/7 coverage: Peak Seasons (Customer service):
If you have seasonality in your business, I’m sure you have experienced the increased flow of customer inquiries in the peak season. People usually work twice their capacity at this time. It is only logical because if you don’t work twice as hard, the service requests will just pile up to an unmanageable condition.
At this time, your outsourcing partner can provide 24/7 coverage to address your customers at their earliest convenience. This will surely save you and your team from the ‘burnout.
6. Save more time:
“You know you’re busy running a small business when you have zero time to wash your own hair.”
With outsourcing, you’ll not only save time to focus on the core aspects of your business, but you’ll save some time for yourself as well. If you’re in good health, well-rested, and happy, you can contribute a lot to your business, bringing you one step closer towards growth.
“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
-Lee Kuan Yew
Table of Content
- 1. Complications In Control
- 2. Communication Issues
- 3. Problem With Quality
- 4. Security And Confidentiality
- 5. Impact On Company Culture
- The Benefits Of Outsourcing
- 1. Decreased Capital & Labor Cost
- 2. Access To Experienced Workforce
- 3. Increased Speed And Quality
- 4. A Velvet Customer Experience
- 5. 24/4 Coverage :Peak Seasons
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