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To Outsource or Not

To Outsource or Not

Ever-demanding clients. Deadlines to beat. Crisis Management. Non-stop calls. Back-to-back meetings. These are the usual scenarios at budding organisations today. Business has to be quick and efficient for any organisation to survive in today’s highly competitive market. Each business decision has to be evaluated in as much detail as possible.

In order to achieve maximum efficiency, small-businesses are increasingly tapping on to the current trend in the ecosystem i.e. turning to outside contractors to get work done. However, whether the decision to outsource is right for a particular business or not completely depends on the internal situations and needs.

The decision to outsource can be a function of lower operational and labour costs, a lack of expertise within a business (for specialty functions), or to keep employees within the business focused on the core business functions. Lower operational and labour costs are usually the main reasons why companies are outsourcing, thereby making them more efficient and helping them reap bigger revenues.

Of late, many small businesses are outsourcing finance functions because many of them are not confident of taking up high-level financial management tasks. Several progressive businesses are gaining significant advantages from this, as it works out far cheaper and beneficial than having a highly paid CFO.

Many companies are also outsourcing HR functions like hiring, training, managing the performance management system and payroll processing to free-up their internal HR team to enable them to focus on more strategic activities for the organisation.

The need for outsourcing generally arises when there is a lack of expertise internally to manage certain functions that impact the company’s desired growth. Therefore, by delegating responsibilities to external sources, companies can focus on offering greater value to their clients or customers.

However, the decision to outsource has to be a measured one, and businesses should opt for outsourcing only after thoroughly thinking through the pros and cons. Special attention must be paid to the profile of the service provider. Today, technology makes it a lot easier to find the most reliable and capable provider. Professional networks and platforms like Twitter and LinkedIn can be leveraged to zero in upon the most suitable and trustworthy provider.
Investments have to be right, so it is best if companies allocate a budget for outsourcing, which could be the surplus not being used in any running projects. Allocating budgets will also ensure that spends on outsourcing do not go overboard.

Outsourcing should never be a hasty decision; business owners should invest time to carefully weigh the cost and efficiency advantages, identify the right vendor, and the kind of value add coming from them. Companies need to ensure that they are outsourcing only to improve upon their efficiencies and ensure that the engagement yields optimum results for all stakeholders involved.

To Outsource or Not


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