8 Simple lessons about outsourcing to grow your business
One of many signs of success is when you’ve reached a point where you can no longer do it all by yourself. At this point, you must be honest enough to say you’ve got to get some help.
Just like every other entrepreneur, whether you consider your business to be big or small, making decisions will always be a critical factor in hitting financial targets or generating your desired quarterly revenue.
With the growth of your company/business comes the need for more skills and resources, and although the first option would be hiring more employees, that would require capital to invest.
I’m quite sure you’ve heard of offshore outsourcing.
Outsourcing and offshoring
Large multinational companies like DHL, Jetstar, Telstra, Coca Cola, and Virgin Australia have benefited from offshore outsourcing.
Outsourcing, simply defined, is hiring another company to undertake any part of your business ventures. It lets you off on mundane tasks and allows you to concentrate on activities that need your time and effort most
Offshore outsourcing is the process of relocating your office jobs overseas to common offshore locations of BPO services like the Philippines, India, and China.
And although outsourcing can be done locally, the most widely practiced is offshoring.
You might think that offshore outsourcing is only possible for big companies but with technology today, those days are long gone.
Small companies and startups are highly encouraged by any Business Process Outsourcing or BPO provider as they have made it possible for them to play on the same field as larger, more established corporations.
Why outsourcing is good
Outsourcing is desired by numerous companies, motivated with factors like lower cost, productivity, and access to resources & tools.
When outsourcing is done right, it helps you find the right way to conduct your business in order to make your operations work and stay competitive in the most cost-effective way.
When to outsource
How will you know if outsourcing is the solution for your business?
If a process your team is handling is any of the following then it may be the best time to turn to service outsourcing.
- The task isn’t central to generating profits or competitive success.
- It is not generating profits or competitive success.
- It wastes valuable time and energy.
- The tasks can be done cheaper in-house but drains resources that could be better used elsewhere.
- The activity isn’t one that people enjoy doing.
- The skill required is so specialized that it’s impractical to have a regular employee do it.
- The task is a need that’s only temporary or that recurs in cycles.
- It’s less expensive to have someone else do it than to do it in-house.
When not to outsource
Just remember outsourcing is done to make your business more productive and profitable and not because you don’t want to do it.
CompTIA’s research on trends in managed services shows cost is less of a factor than one might expect
Main reasons not to outsource business functions
If the task is a primary activity that your company was founded on or focuses on in its business operations, then you must rethink if outsourcing is for you.
For example, if your business specializes in web design, refrain from outsourcing the design since it is the focal point of the business.
You could still, however, outsource tasks such as copywriting or social media management.
Ideal tasks to outsource
Almost anything can be outsourced these days, but which tasks should it be?
Some of the tasks that are ideal for outsourcing include:
Data entry
Routinary data entry tasks such as indexing, scanning, cataloging, and order processing are an ideal function to outsource. Clear instructions, deadlines, and accuracy are what needs to be given thought for this.
Customer support
One of the most outsourced business task today is customer support. The cost of employing, providing office space and training, and paying taxes for support representatives can be quite high, whereas an outsourced call center in a country like India, Philippines or China can frequently do the job for a fraction of the cost.
Accounting
Accounting is a corporate task well-adapted to outsourcing because it involves a standardized methodology that professionals all over the world know. But given the sensitive nature of the work, however, it is important for businesses to ensure that they are working with competent and qualified teams of accountant.
Web design
This is a more creative task yet it is still frequently outsourced nevertheless. However, not all web design jobs are appropriate for outsourcing. If your web design job requires significant creativity or innovation, it is probably best handled by an in-house designer.
Virtual assistant
Virtual Assistants can maintain your schedule, help you set up interviews, and manage other aspects of your schedule if you are having trouble with those tasks.
Social media management
Having a strong social media presence can be a big help to your business but it can be time-consuming and may not be your expertise. Outsourcing a competent community manager that can create a profile, plan content, set-up guidelines, constantly update, monitor, moderate and build your business’ public image, would be a smart move.
Email support
Going through your e-mail takes up a lot of your time. If this is something you’d need to get out off to free you up for other things then outsourcing is the way.
The future of outsourcing
The benefits that outsourcing brings to both buyer and offshore provider such as generating more profit and demands for new goods and services leads to the need for creating new jobs. This tells us/shows us that outsourcing is here to stay and keep growing.
Weighing up the pros and cons
Outsourcing is a big move for any business owner. Here are some pros and cons to help you decide before fully investing.
PROS
Cheaper costs
It’s the fact that outsourcing can definitely help you reduce your overhead costs that make entrepreneurs make it as one of their options.
It’s expensive for any company to hire and train new employees and technology is constantly changing and it can be timely and expensive to keep changing and adapting to the latest and greatest while trying to grow and expand.
With the right service provider, businesses can have an efficient and cost-effective way to take advantage of new tools without having to make much investment in new technology, system, and labor.
Increases productivity
With outsourcing, you will be able to focus on your core business concerns while your newly hired highly-educated and expert staff does work as well even while you sleep, depending on your business needs/demands. Some of the largest offshore outsourcing companies in the world can offer 24/7 staff support.
For instance, Cisco, the famous networking giant company invested over $150 million in structuring and expanding its technology development enterprise in India.
Cisco also set up its 2nd largest research and development facility in Bangalore, India, which houses more than 1500 Indian technical professionals.
Cisco’s Research and Development Bangalore center was developed to help the company to deploy fast products and solutions, develop new technologies as well as successfully meet customers’ demand through providing technical support.
They also plan to make more investments in India and leverage the skills of Indian networking professionals. The kind of support offered is live support services and Email support services.
The services in the research and development center include:
24-hour monitoring and response
Technical support for all Cisco technologies
SLOs for mean time to notify, isolate and to resolve incidents
Collaboration with Cisco IT Tier 3 organization
This investment has helped CISCO to integrate channels and customer-facing processes resulting in higher customer satisfaction and more profitable growth.
If your business would need to operate outside the normal 8-9 hour day shift just like Cisco, offshore outsourcing makes it possible.
Your own experienced/specialized workforce
Building a highly experienced and specialized workforce takes a lot of time and money. You can tap into the expertise of the outsourcing company and its highly specialized staff/team that can perform your process even better.
Good talent can be hard to find and outsourcing can help bridge talent gaps.
Risk-sharing
Outsourcing permits a company to share risk.
By spreading the word, you share with them your risk and that results in reduced total risk.
Since your team is made up of specialists or experts in the tasked you’ve outsourced, they will be able to help you in planning and mitigating potential risks better.
Happier internal staff
Taking offloads makes you and your staff be more relaxed and stress-free which helps in giving them more time to pursue developmental or learning opportunities.
It is important to let your internal team be able to perform new, growth-oriented activities for them to be more efficient and effective when contributing ideas and working on real projects.
It also sends a message to them that you care about their professional growth and career advancement.
CONS
Language, time zone & cultural barriers:
These 3 are crucial for the successful execution of the project since it has an impact on communication, understanding, workflow, and productivity.
A misunderstanding may occur since your offshore partner’s first language is not Englis.
You and your offshore partner are culturally diversified. This cultural contrast may lead to miscommunication which will reflect on their performance.
Offshore outsourcing companies have different time zone compared to yours.
For example, if you are from the US and you outsourced your company’s customer contact service in China, you might have difficulties in getting in touch if you are in the urge to doing few amendments to your requirements in their non-working hours.
It’s because your time zone difference is 12 hours. If it’s 9 AM in Washington, then it’s 9 PM in China.
It could be quite a challenge to manage staff remotely.
Security risks
When an outsourcing company is hired by an organization, it is crucial to protect the organization’s important data and intellectual property.
Outsourcing HR, Payroll and Recruitment services, involves a risk in exposing confidential company information to a third-party.
Another example is when you’ve outsourced a task that involves requiring your customers/clients credit card information.
Delayed deliverables
There are cases of having habitual delays by offshore partners, especially if you’ve paired up with one that’s unequipped.
Although delays may be caused by numerous elements, your outsource partner is solely responsible for the on-time delivery and quality.
If such delays reoccur too often, it’s definitely going to reflect on your core competencies.
Quality control
An outsourcing firm may be catering to the expertise-needs of multiple organizations at a time. In such situations, they may lack complete focus on your company’s tasks.
Facing the challenges
Trying out anything for the first time will be hard.
Outsourcing has its advantages but one must be ready to take on the challenges that come with it.
The risks or cons can be mitigated when possible drawbacks are carefully studied and when you chose the right service provider.
Post-contract processes
This issue occurs when processes have not been properly and clearly discussed in the first place.
A lot of factors needed to be taken into consideration are overlooked or missed.
Solution: The questions of financial, contractual, and service delivery must be observed and discussed by the service providers and clients.
Contract misunderstood by both parties
In the event of managing the initial implementation of activities as well as ongoing operations, both teams from the client and service providers should be working for the goals set.
It is crucial when both teams have new members just learning the agreement.
The significant number of new members increases the possibility of impairment in the absorption period causing an uneducated view on both sides. Solution: Both parties will be engaged in changes and will have a different interpretation of the contract.
To achieve mutual understanding, you and your service provider should both be proactive in accurately communicating every point stated in the contract.
Designating single accountability can help, either in one person or department, for any issues associated with contract interpretation.
Loss of key talent and poor knowledge transfer
The idea of outsourcing creates uncertainty for existing employees. And so, staff look elsewhere for employment.
Also, some client staff on knowledge transfer is currently engaged into a service provider.
With the state of current events, the staff is demotivated decreasing the efficiency in service delivery.
Solution: Before any implementation takes place, you should have already strategized on developing retention policies that should address both employees and contractors.
Retention policies should cover reliance on communication and trust to bonuses being paid to staff based on the achievement of specific goals, knowledge transfer, and continued employment.
Resistance to adopting new methods
Business requires changes in process, technology, behavior, and staffing.
For many outsourcing services, the provider is not always in control of the end-to-end result.
The end-users prevents successful business by not complying, delays in their responsibilities and strategy disagreements
Solution: In cases of a resistant end-user, be reminded that your service provider is solely responsible for providing quality services.
You can openly inform your service provider that they are not meeting the performance metrics that you’ve set.
Changes end
After changes are implemented for progression, going back to old processes is also an issue.
This happens because clients are expecting that benefits will continue to be gained while cutting the cost.
This is not true because as the client does this, they are cutting off the resources that have made outsourcing successful.
Solution: Cutting back on costs may not always lead to more savings or profit; it can also lead to reduced benefits and can impact your future success.
Think long and hard on the pros and cons of cutting back on “unnecessary costs” and see which outweighs the other.
These problems may seem hard to overcome but it is possible to resolve the issues with awareness, attention, and focus.
The key is to be ready, foreseeing possible issues that may arise and being ready even before the issue arises so both clients and service providers are always one step ahead.
Lastly, the clients and service providers must always be susceptible to change, for change is constant.
Finding the right contractors
There’s a long list of companies that offers offshore services but as a wise entrepreneur, you don’t just pair up and entrust your business to the first company suggested to you.
finding-the-right-outsourcing-contractors
Ask for recommendations
Finding a reliable and capable offshore outsourcing firm requires a selection process. The best thing to do is to ask other business owners as well for recommendations.
Do your research
Once you have your list of possible offshore partner, you can research about them, look for reviews and testimonials.
Talk to several providers
You can then start talking to your preferred service providers and discuss your business needs, performance metrics and then coming up to an agreement will follow.
Making it work
Outsourcing is a long-term partnership with your service provider.
Communicating your expectations should be clear and consistent. Building your relationship with your outsourcing partner should also be prioritized as well so that small conflicts can be avoided.
Here are some factors that can help drive a positive impact on your partnership.
Contract management
You can expect that everything between you and your offshore outsource partner will run more smoothly when you make sure you prioritize your contract management.
Your contract must be refined and revised from time to time.
Have open communication
By communicating openly and as often as needed you can ensure that business and relationship goals are clearly and regularly conveyed.
Your rapport will grow from the years of experience and learnings you have had along the way.
Share your action plan
Don’t fall victim to instances where you are unable to find signed copies of contract terms, schedules and change variation notices.
So when disputes arise, you will proof of what you have officially agreed to and signed to.
Respect realistic capacity
You should also be aware of your outsource partner’s capabilities and restrictions.
A clear agreement must be set to drive great outcomes.
Encourage value-boosting behaviors
Rewards can turn into excellent performance since it helps with improving your relationship with your outsource partner.
However, it is important that you communicate with them clearly so all can appreciate both the benefits and impacts of good and bad behaviors on the project and themselves.
Reaping benefits
Outsourcing comes with risks but with careful researching, planning, and implementation, you will be able to reap great benefits for your business.
Outsourcing is affordable, unburdens your in-house staff from repetitive tasks, helps increase your productivity, and helps you with risk distribution with the help of your expert offshore outsource team.
It has been a proven business solution. You might want to start talking to a team that can offer you these outsourcing service advantages for your business.
Independent
