Outsourcing is not a new concept. It has been around for centuries. It started with companies outsourcing their manufacturing to countries where the labor was cheaper. In the recent past, the internet has made it easier to outsource services as well.
The business ecosystem has dramatically changed today, and smaller startups are making a massive difference by outsourcing their core services, thereby cutting down their costs of operation significantly.
Many startups are able to thrive in today’s competitive environment only because of outsourcing. It is not uncommon to see companies that outsource almost all their tasks and only do their core activities in-house.
What are the activities a company can outsource? Almost every activity can be outsourced. However, some of the most common processes to outsource are:
Accounting and Finance
The last thing a company wants is for its main staff to waste time on counting beans. Every business needs to keep records and manage its finances well. Accounting is the language of business. Every business owner should grasp financial statements. However, that doesn’t mean they should handle the bookkeeping themselves. Many firms focus on bookkeeping, tax payments, and other legal requirements. It may be a good idea to outsource the accounting and finance tasks to an external firm.
Administrative Tasks
Administrative tasks can take up a lot of time and energy. It can be a massive distraction from your core activities.
Picture making five phone calls just to set up one appointment. You can either automate this process or hire a virtual assistant to handle it for you. In addition to scheduling appointments and managing your calendar, a virtual assistant can answer calls, respond to emails, and remove unnecessary information from your workflow.
Technology
From websites to social networks, technology is an integral part of any virtual business. Many businesses are trying to do these activities in-house “to save money.” The technological world is changing every day. Trying to keep with the changing technological world may not be good use of their time. An outsourced company can help set-up an ERP system, a web presence and even manage your social media pages.
Customer Support
Although you must work with your clients as a service professional, some parts of customer service like drafting contracts, replacement dates, resources, and reports can be outsourced.
Copywriting
Written communication is an integral part of every business. Businesses need a copywriter to write copy for their website, brochures, email campaigns, social media pages, help pages, operating manuals, and communication to their clients and vendors. Many business owners think an administrative assistant can do their copywriting. Unfortunately, copywriting is a specialized job.
Hiring a specialized copywriting firm can enhance the quality of your content and make your business look more professional.
The benefits of outsourcing
Outsourcing has a lot of benefits. It is not just beneficial for larger companies; it can benefit smaller startups as well. The logic behind outsourcing for companies is to focus on their core activities and outsource the rest.
Other key advantages include:
Access to specialized talent
Running your core business can be a daunting task. Therefore, it is quite clear that business owners will not have enough time to keep abreast of developments and adapt to the latest technological developments that a company needs to stay ahead of the competition. However, specialized providers keep their eyes open for the most recent developments. This helps a company get the benefits of the latest industry advancements that can help a business grow.
Economic factors
Most startups are looking to cut down their fixed costs. Outsourcing tasks that are not required on a regular basis can dramatically cut down a company’s fixed costs.
If a company’s revenues are project-based, fixed costs can eat into the revenues of a company when there are fewer projects. However, having an option to outsource tasks gives companies the opportunity to expand or contract depending on the number of projects at a specific time. As they say, revenues are not always under a company’s control. Revenues can increase or decrease depending on market conditions. However, expenses are under a company’s control. Outsourcing helps increase or reduce costs as and when required.
Transfer of knowledge
You may face situations where your company has acquired a large project, and there is a shortage of experienced personnel to handle this enormous task with skill. Outsourcing helps recruit members with the skills needed to perform these operations and, therefore, can also contribute to the transfer of their knowledge to other members of your company.
Ensure higher performance
By outsourcing, you can lose your control over the project to some extent. However, you have access to a variety of specialized talent to meet your exact needs. It is not practical to have staff with all the capabilities in your office.
Eliminate the risk of obsolescence
There is always the risk of obsolescence if you invest in new technologies, but this is not the case if you outsource activities that require investment in new technologies. Anything that requires excess capital expenditure should be outsourced. This frees up cash to invest in sales and marketing that adds to your top line.
Companies are even using coworking spaces rather than building their own office because it reduces their capital expenditure. They can increase or decrease their staff count, as and when required.
Reduce risk and uncertainty
The outsourcing of your business process ensures that no operation is interrupted by the sudden and unexpected shortage of resources. If someone quits your company, finding a replacement can take thirty to ninety days. However, an outsourced firm can find a resource almost immediately for you.
Conclusion
Outsourcing can help increase productivity and efficiency while minimizing fixed costs. The cost of a full-time employee includes employment taxes, essential equipment like computers and phones, space, recruiting expenses, and the cost of managing them. Outsourcing helps you eliminate all these costs and focus on your core activities. Besides cost-cutting, it also gives you access to specialized talent.