The debate about whether to outsource part of the business functions, which has long persisted in the business environment, has been fundamentally resolved. There are few doubts about the value and real significance of outsourcing regardless of the business model. Moreover, small and start-up businesses have functions that can be efficiently implemented without outsourcing, of course, but this will greatly increase organizational, time and financial costs.
Outsourcing is interesting in three cases:
- All the processes in a company are built in, but outsourcing can increase their effectiveness;
- A company implements a new process but not the core business process;
- A company outsources everything but the business processes which constitute its competitive advantage.
If a business is just starting out, all functions not involved in the development of the business can be outsourced.
What can outsourcing bring to the table? The first thing that entrepreneurs obviously look for is savings on fixed costs such as staff salaries or non-core business processes that are outsourced. But the benefit can also be operational – here, the analogy of the office in which a company is going to operate is appropriate. You can buy an office, equip it with computers, internet, coolers, hire a cleaner, etc., you can rent an office (but all the costs are paid by the company), or you can rent space in a smart office, putting all the headache of maintaining it on the landlord. In addition, it is possible with operating common tasks, just check how to outsource your invoicing. The latter is especially economically advantageous for small companies with fewer than 40-50 employees, for which a traditional lease would be more expensive per employee.
The logic behind outsourcing here is the same. You can outsource IT development, advertising, marketing, accounting (if finances are kept in white), HR selection, payroll, call centres, couriers, E-Commerce. Savings – if you compare them to the salaries of these two hypothetical employees – are more than twice as much, the entrepreneur estimates. Plus the expert level of external specialists is higher, because it’s not one or two people, but three or four, and each has its own specialization, which covers all the needs of the E-Commerce shop. And the promotion of the shop is done by the company itself.
How to choose
It is important to pay special attention to the selection of outsourcing teams. Rule number one in the search: there is no such thing as fast, high quality and cheap. Either fast, high quality, or cheap. An outsourced team should have an adequate deadline, a good portfolio, which must be checked, as well as third-party references, gather the contractor’s reputation and then compare it with others.
A high price is not a guarantee of quality, because the big players can inflate their estimates, which hurts medium-sized contractors, who may be screened out with suspicion of dumping. You also need to pay attention to the contract, which should specify penalties for poor quality services.
Another important question is who selects the outsourcing team? The problem with big companies is that it could be done by cost-oriented financial managers. It is best if the selection is made by someone who will later be responsible for the result, the quality of the work done: a project manager (if outsourcing is undertaken for a project) or a product manager (if this is a long-term story). You can start with processes that are not critical to the business, so that over several months you can test the outsourcing company, the effectiveness of the model and the results. If for some reason the services are not suitable, you have to find the strength to give up on the company you don’t like and find a new one.