Outsourcing is becoming an increasingly normal part of doing business. Companies of all sizes are considering outsourcing everything from customer service to IT, contract packing and accounts. To some, outsourcing is simply “the done thing”, but is it always a good idea?
The truth is, outsourcing is not something that you have to do. There are many companies that choose to keep all of their work in-house, and those companies are still thriving today. Outsourcing is an option, something that allows you to extend your business without a huge amount of up-front expense. Here is a quick look at some of the pros and cons of outsourcing.
Reasons to Outsource
Outsourcing can offer significant cost savings, and gives you more freedom with how you operate your business. If you run an online store, outsourcing e-fulfilment frees you to focus on marketing and research and development. If you run a sale or special offer and see a huge spike in orders, the outsourcing firm will likely be in a much better position to cope with all of those orders than a smaller company would be.
Outsourcing also works well for things that require specialist equipment. Choosing to “palm off” your contract packing work to a specialist firm could open up packing and delivery options that you simply aren’t able to do in house.
Outsourcing takes advantage of the economies of scale, and that’s something that is incredibly desirable when you are trying to grow your business.
The Dangers of Outsourcing
Outsourcing can be a scary proposition for companies that are accustomed to doing things in house. What if the vendor is unreliable? What if they do things differently to how you have always done them, and alienate your customers? Will the vendor be able to help you when your needs change?
Outsourcing means delegating a part of your business to another company, and there will always be an element of risk involved with that, but you can minimise the risk by choosing your outsourcing partner carefully. If the success of your business relies on a key person or supplier, try to negotiate a long-term contract with them to minimise the risk of them moving on or their deals coming to an end.
Do not choose an outsourcing partner based on price alone. It is a good idea to get several quotes and consider the location, time zone, and services offered by each company. Interview each outsourcing provider as if they were applying to become an employee. Choose the provider that offers the most comprehensive and flexible plan for the services that you are interested in.
The Decision is Yours
Outsourcing is a good way to give your company room to grow, but it is not for every company, and even companies that can benefit from outsourcing will find that it makes sense only for some areas of their business.
If you are considering outsourcing, think carefully about which parts of your business take up the most of your key employee’s time. If you are spending more time on administration tasks than on the core areas of your business then outsourcing might be right for you.
Outsourcing is just one of many options. A lot of companies use it, but that doesn’t mean that you should. Chose it only if it makes financial and operational sense for your business.