The practice of outsourcing certain tasks or processes to outside firms is becoming more common to small businesses but it’s not a new concept to big businesses. Big businesses have been outsourcing complete factories and departments to third party providers, some overseas, some local. What started with manufacturing in the 70’s gradually moved towards accounting, customer service, I.T., data entry and even research.
Factory jobs were mainly outsourced to countries with cheap factory labor like Taiwan, Hong Kong and China and they are still the primary destination for outsourcing factory jobs. Knowledge jobs are however; outsourced to many other countries like Pakistan, India, Philippines, Ukraine, the Balkan countries and some even to African countries like Kenya and Nigeria.
Small businesses however; do not outsource for the same reasons as big businesses. Larger companies outsource primarily to reduce costs. Small businesses outsource quite often to leverage skills and resources they don’t have. They also want to reduce costs but quite often they outsource because they otherwise can’t afford to perform those functions by themselves.
Let’s examine some of the key benefits of outsourcing for small businesses:
Experience and expertise – Outsourcing enables small businesses to use skills and experience they don’t have in-house and cannot afford to hire full time. They leverage the skills of companies having the right resources and experience to get their job done. Once the project is over, they don’t have to worry about keeping the skilled workers occupied gainfully or the stressful task of laying them off. That is somebody else’s headache now. It is common to outsource web design and development, CRM implementation, SEO, bookkeeping, data entry and customer service.
Reduced costs – one of the biggest factors when management makes the outsourcing decision. If you are a small firm just starting out, outsourcing will allow you to keep expenses low in the early stages of your business. It also makes you look more attractive to investors as you have more capital to invest in revenue generating activities.
Better efficiency – Getting more out of each dollar – It gives you a competitive advantage as your operational costs are less than your competitors and you can keep your prices lower to the detriment of your competitors.
Let’s you focus on core business activities like finding new customers and building better products & services. Focus on doing what you do best, set your priorities and leave the rest to competent third parties.
Reduces risk – you can embark on new projects without investing heavily in personnel and material resources. When you outsource, you reduce your risk. If things don’t work out, you can terminate the contract. If it does work out, you can always bring in the resources in-house.
In conclusion, smart businesses outsource to reduce risk, reduce cost and gain a competitive advantage.
How to outsource? You can do a little research and establish relationships with companies like http://interloperinc.com for I.T. Related work. Or, you may post your projects on outsourcing portals and solicit bids from companies specializing in such work. There is a list of outsourcing platforms at http://bloggerkhan.com/list-of-popular-freelancing-outsourcing-platforms/18505
Start small and get familiar with the process. Establish relationships and as your comfort level grows, start outsourcing more and more projects.