More than 300,000 positions are outsourced annually in the US, according to statistics by CreditDonkey. Different companies have their unique reasons for outsourcing, with most of them chasing lower labor costs. When perfectly executed, outsourcing can help your business grow, since it enables you to focus more on your core business. However, if you're not careful, you might end up crippling your business as a result of poor outsourcing decisions. The key to successful outsourcing lies in knowing which functions to outsource and choosing the right time to do so.
Choosing what to outsource
What you choose to outsource varies depending on your industry. The best tasks to outsource are those that are critical to your operations but not a vital component of your business strategy. For example, if you are a manufacturer of snacks who needs to deliver to outlets every day, you can outsource the delivery task, as it wouldn't affect the people who ultimately buy the snacks. However, you shouldn't outsource the task of making the snacks, as it would likely affect their taste, and consequently, your customers' purchase decisions. Since there is little strategic advantage of delivering the snacks yourself, you can hire someone to do it at a fraction of what it would cost you to buy a delivery vehicle and hire a full-time driver. However, you must ensure that your deliveries will be timely and cost-effective when you choose to outsource.
Knowing when to outsource
When deciding whether or not to outsource, you need to do a cost/time analysis. There are tasks that you can conceivably do in-house when you have the right amount of time and money. Then there are those that you need to outsource. The most common tasks that are outsourced are those that are time-consuming and can be handled by another company more cheaply. Other tasks that should be outsourced are those that require world-class skills that no one in your firm possesses. For example, businesses that are not inclined to IT are better off hiring an IT consulting agency when they need world-class services. For instance, if you want to build software for your business, it would make more sense to hire a renowned IT company that has built multiple similar software than to hire an in-house IT guy to do it. One-time events, such as making a logo for your business, also go hand in hand with outsourcing.
When properly utilized, outsourcing certain tasks can help you streamline operations in your business. It enables you to maximize your time, strategically utilize resources, and focus on your key growth initiatives.