Almost a third (30%) of businesses in the UK plan to increase their use of outsourcing in the next year, according to research.
Strategically outsourcing is an effective way of bringing in outside expertise that can help your business grow quicker, while also helping you be more productive by taking time-consuming, administrative work off your hands.
It can also help you do it in a much more cost-effective way than hiring in-house resources.
But, outsourcing only works when done strategically and when you target it at the right parts of your business where it will do the most good.
The majority of failed outsourcing projects are a result of businesses blindly diving in and outsourcing the wrong functions, often for the wrong costs.
So, what do you need to think about before you take the plunge with outsourcing in your business?
In this article, Andy MacGregor, Managing Director at outsourced telephone answering service Face For Business talks through the key considerations of outsourcing for business to ensure you get the best return on your investment.
1. Understand Your Ultimate Goal
Not having a goal for outsourcing is a sure way to ensure it fails because you’ll have no benchmark to understand whether the service you bring in is actually benefiting your business.
Do you want to improve productivity by removing repetitive or manual jobs from your team? Are you looking to add expertise to your business at a better cost than hiring in-house?
Before you consider outsourcing any part of your business you need to understand the goals and the reasons you’re doing it.
It could be the case that it would be better to hire internal resources that you’ll have more control over or that might be more cost-effective to bring in-house rather than use a third party.
2. Are There Reliable Suppliers in the Marketplace?
Again, you have to consider the balance of talent available to work in-house versus the talent that’s available from outsourced providers.
Depending on the skills or experience you’re looking for, you could find it harder to find a reliable and cost-effective outsourced partner.
For example, IT support is relatively easy to find and is much more cost-effective than hiring an IT manager in-house, especially if you’re a smaller or medium-sized business.
But as the service you’re looking for becomes more niche and specialized, you might struggle. This is where we come back to understanding the goals you have for outsourcing in business.
If you know the goals you have, you can do better research and find a provider with proven results in the area you’re looking for.
3. Know Your Budget (But Don’t Be Afraid to Be Flexible)
It can be too easy to let an outsourced partner dictate the price of your contract, especially when you’re not the expert in the field or not familiar with the range of costs of the services you’re looking at.
But you need to do some research and make sure the price you’re going to is within your budget and is a better cost option than hiring someone in-house.
You should research the industry benchmarks both for internal staff and also for agency/ outsourced services.
You can use these as a gauge against the quotes you get from the suppliers you reach out to understand whether they fall within the right price range.
But, you shouldn’t be afraid to be flexible on your budget, especially when the long-term benefits you could see from outsourcing far outweigh a higher than expected initial cost.
Just remember to keep your research, goals, and benchmark ROI in mind and continue to measure the results you see against this.
You should also consider the billing options you can get from different suppliers and how this fits in with your business’ seasonal peaks and falls in service demand.
Remember, when you hire in-house you’ll be paying the same wage whether you’re busy or not.
With most outsourced services you can be flexible and scale your services based on the demand you have.
4. How Long of a Contract Are You Signing Up for (And Is It Flexible)?
Once you’ve got an idea of the service and provider you want to use, take some time to understand the terms of the contract you’ll be signing up for, particularly when it comes to the terms of renewal and cancellation.
Are you going to be tied into a fixed long-term contract or is there flexibility built-in?
Also, can your provider offer a free trial of their service before you sign up to demonstrate how the service will work in your business?
5. How Can You Monitor Performance?
This comes back to proving your ROI of any outsourced service you hire. For some services, managing or proving ROI is relatively easy. For example, hiring a marketing agency is measured by the leads you generate.
For some services, it can be harder to manage and this is why you need to be sure to set performance benchmarks prior to outsourcing.
Ensure You Get the Best Results From Your Outsourcing
Ultimately choosing to outsource any part of your business is a big decision and will carry an element of risk unless you do thorough research and complete your due diligence on any potential provider.
As outsourced service providers ourselves we know and understand the hesitation some business owners have when it comes to the perceived ‘giving up control’ by bringing in a third party.
But by doing your research, and having a clear set of goals and objectives, outsourcing could be one of the best decisions you’ll make for your business.
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