Outsourcing is often considered a smart approach by many business owners looking to maximise operational efficiencies. This strategy allows you to assign specific tasks or projects to an external contracting company or independent service provider. While forming an alliance with the right provider does have its merits, the process of contracting out may not work for everyone. Here are a few pros and cons that will help you decide whether you should adopt outsourcing as part of your business plan.
The Pros Time efficiency – As a small business owner the temptation to do everything yourself is great, especially if funds are tight. While this may help to keep financial costs down, you will find yourself spending a disproportionate amount of time on basic operational tasks.
Hiring a good service provider will significantly redress this time imbalance, allowing you to re-focus your attention on income generating activities.
Speed of implementation – Contracting out certain tasks allows you to complete multiple projects simultaneously. Instead of working on just one project – for example, building your website – you will be able to develop your marketing plan, create your products and build relationships all at the same time.
Flexibility – Outsourcing is scalable depending on what you need completed and by when. One day you might need a new logo designed, the next you may require a ghostwriter to create an eBook or someone to film a promotional video. You can scale your outsourcing resource up and down according to when you need it.
Expertise –You can gain access to a higher level of expertise without having to develop specialist knowledge or acquire new skills.
Let’s say you need some graphics created. A freelance graphic designer typically spends a lot of time and money fine tuning their craft. This is what they do for a living. They have the relevant tools and software to perform a professional job and they bring a higher level of proficiency into your business.
The Cons Initial time cost – Outsourcing will save you time in the long term, but there’s some initial groundwork to be done. To maximize the return on contracting out you will need to review your business, decide which aspects you want to outsource and then create clear guidelines detailing your exact expectations.
In some cases you may need to train your outsourcer to work in accordance with your procedures. All this extra effort takes time.
Trial and error - It may take a while to find a suitable service provider for your business and you may have to endure a period of trial and error. Sure you could work on recommendations provided by others, but no two businesses are the same. Just because an outsourcer worked well for your friend, does not mean they will work well for you.
Carefully weigh up the risks involved in bedding in a new outsourcer. Can you make allowances for the odd mistake?
Security risks – It is not always easy ensuring the security of your business, especially when you choose to outsource work involving confidential information or IT functions. There is a real danger you could expose your business to data loss or theft, if you don’t conduct careful due diligence when selecting the right service provider.
Outsourcing is a great strategy for completing tasks or projects you don’t have the time or expertise to do yourself. While there may be some extra work involved in preparing to contract out certain aspects of your business, you may find the benefits of this method far outweigh the potential dangers.