4 Critical factors to bear in mind when considering outsourcing
Deciding whether to keep your business functions in-house or outsource them to an external company is a critical decision in today’s business landscape. While there are certainly pros and cons to both, your decision will have significant impacts on the way your business operates, so it’s paramount to understand exactly what it is you’re getting yourself into. As outsourced data centres and cloud storage become increasingly common in our professional and personal lives, the trend towards outsourcing critical business functions is growing – but does this mean that keeping your processes in-house is an outdated concept? In this blog, I’ll outline some of the pros and cons of outsourcing business processes and what to consider when looking for the best possible outsource solution.
1. Nothing makes up for experience in your field.
A serious risk that comes with outsourcing is that the partner you choose might not have the same understanding of your market as you do. This could wreak havoc on your bottom-line, cause you to breach contractual agreements, and lower the quality of work or service your organisation delivers – ultimately impacting customer satisfaction. For this reason, it’s vitally important to do your research and find an outsourcing partner that shares experience in your market or understands it as well as you do, and, crucially, that aligns with your business’ culture and work ethic. Selecting the right outsourcing partner can do far more than just take some weight off your team’s shoulders – at best, it could bring unprecedented levels of efficiency to your workplace.
2. Outsourcing is a business partnership – make sure you do a background check.
The reasons for outsourcing processes come down to a few common factors: saving costs, increasing productivity, or providing burst capacity. If you’ve selected your outsourcing partner wisely, you should see clear improvements in these areas. Your ideal partner should have solid experience in their industry and be able to suggest the best methodologies and tools to suit the unique context of your busines
3. Don’t hand over the keys before you know the driver.
One result of outsourcing that causes executives to break out in cold sweats is that it involves handing over a significant amount of control to an external party. Granted, this can be an intimidating process – whether you’re outsourcing an entire department or a single task, you’re essentially handing the keys of that function over to a stranger. The best way to get around this is to find an outsourcing company that you can identify with and trust in when handing over responsibility. Take the time to understand the culture and inner workings of your prospective partner, the company’s vision and, most importantly, get to know the key people you will be working with.
4. The best outsourced solutions are more cost-effective than internal hiring.
The potential for cost savings is often cited as the primary benefit of outsourcing business solutions, but evaluating your options based on their cost alone could set you up for failure. It’s vital to ensure that whoever you’re outsourcing your processes to is capable of delivering at least the same quality of work that your clients have come to expect from you – opting for cheap labour might seem like a good financial decision at first, but the long-term implications to your revenue can be catastrophic. Cost of output is the key measure and not the unit cost of labour. Even if you have to pay more for a more reputable provider, the holistic benefit to your finance will be more than worth it. Low cost labour delivering 75% of target output at 100% of budgeted cost is less attractive than higher cost labour delivering 125% of target output at 100% of budgeted cost – yet the unit cost of labour is too often the focus. At best, an outsourced partner will complement your workforce by bringing with it the wealth of experience that comes with working across multiple clients, and ensure that your business meets or exceeds its objectives.
To find out more about ECS Digital, including the training and consultation services we offer to optimise your business processes for outsourcing, and how we can support you by enabling your chosen partner, please don’t hesitate to contact us.