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An Example of Outsourcing in Small Business

Outsourcing Example Scenario 1

XYZ Ltd is a new business that sells specialised computer hardware from a small shop in the centre of town. It is a small business with 6 employees that all have specific roles.

For the first three months, sales have not reached expected figures and although costs are being covered, profits are not evident. However, the employees do not have sufficient skills in sales techniques other than 'direct' sales (on-site).

                                                    "employees do not have
                                                             
sufficient skills"

XYZ Ltd has therefore agreed to outsource 'sales' to external service providers. They will use a service to conduct telemarketing sales to businesses throughout the UK. 


XYZ Ltd frequently introduces new offers and discounts which they find hard to reach the attention of the public. Consequently, they believe mail shots will be beneficial which they will outsource to a mailing company.

The mailing company will use their own specialist mailing lists in addition to their professional design and editing skills to produce regular sales letters.

Six months later and sales figures have increased significantly. XYZ Ltd is now looking to increase their sales potential even further. Expert advice has suggested the use of a commercial web site to advertise products and for on-line sales orders.

XYZ Ltd is happy to employ another person to administer and process the on-line sales orders which will be received in the form of e-mail. However, they do not have the resources, space and skills to run and host a web site and are reluctant to giving up their current shop location which they believe is ideal.

Respecting this, XYZ Ltd has decided to outsource the web design to a professional that will regularly update the content. In addition, they will also outsource the web hosting.

XYZ Ltd expect all outsourcing companies to acknowledge their financial capability to come up with new and fresh ideas to drive sales potential to new levels.


Outsourcing Example Scenario 2


ABC Ltd is an independent garage that sells second hand cars. The increasing local competition has forced ABC Ltd to consider increasing their services and communications in order to increase competitiveness and stimulate growth.

They have made plans to sell new cars and to provide a servicing department. In addition, they plan to provide a high degree of after-sales customer service by contacting customers by phone (courtesy calls, MOT/service reminders, etc).

                                                    "prefer employees to concentrate
                                                              
on their core activity"

However, ABC Ltd has acknowledged the existing lack of skills and resources to complete such tasks and would prefer employees to concentrate on their core activity - obtaining and selling cars.

Consequently, ABC Ltd has decided to outsource some processes to allow them to concentrate on core activities and to allow the process of "stepping up" to be more effective.

Firstly, ABC Ltd has outsourced the management of customer details to a database management service. In addition, they have approached a call centre to outsource the process of customer service (contacting customers - courtesy calls, etc).

By liaising closely and regularly with the outsource companies, ABC Ltd expect them to come up with new ideas that will allow the process of data management and customer service to become more effective and competitive (within their financial capability).


Article Index

1 Introduction
2 Advantages and Disadvantages
3 Outsourcing




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