Outsourcing in Small Business
Introduction
Outsourcing is a practise that is becoming increasingly popular with today’s businesses: over 50% of UK businesses currently outsource. With the pressure to become more efficient and competitive, businesses – both small and large – have turned to outsourcing as the solution.
“businesses must constantly assess the effectiveness of outsourcing”
However, outsourcing can prove costly to a business if they do not implement the practise effectively. Consequently, businesses must constantly assess the effectiveness of outsourcing contracts and address any issues immediately.
To some businesses, outsourcing may be a practise that has so far been overlooked. However, after reading the article it may give a business inspiration for rethinking how they will operate in the future.
What is Outsourcing?
Outsourcing is the delegation of a business process to an external service provider. The service provider will then be responsible for the day-to-day running and maintenance of the delegated process.
Take the IT giant Microsoft for example – the complete process of manufacturing their products is outsourced to other businesses.
Fees are involved (as you would expect) that will vary depending on the service required.
To optimise efficiency, it is good practise to liaise closely with the service provider on a regular basis. This will prevent issues arising due to the lack of understanding and communication between the two parties.
What Isn’t Outsourc ing?
Outsourcing should not be seen as a short-term solution to a problem or need. To be truly effective, businesses should consider outsourcing as a long-term solution whereby building a continued business relationship with the service provider will offer long-term benefits to your customers.
Outsourcing should also not be seen purely as a cost saving approach – this is not always the case.
What do Businesses Outsource?
Basically, anything that you may consider a business ‘process’ can be outsourced. Below are a few examples where outsourcing can be introduced:
- Marketing
- Web design & maintenance
- Web hosting
- IT maintenance
- Manufacturing
- Accounts
- Recruitment
- Switch board (telephone answering)
- Logistics
- Distribution (i.e. of newsletters, mail shots)
- Editing (i.e. of articles, newsletters)
Why Outsource?
There are many reasons why a business may consider outsourcing including:
- The lack of existing skills to complete a process
- To replace a poor internal service (may not be connected to lack of skills)
- Resources are not available in-house to complete the process
- The process is difficult to manage (in general or due to business growth)
- The process may be performed better/cheaper by other services
- You require your employees’ time elsewhere in the business
- The process may not contribute to competitive advantage
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