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Outsourcing: Cheating or clever?

Outsourcing can be an excellent strategic tool, but to succeed you need to know how and when to take advantage of it.

Outsourcing - cheating or clever - article image

For many businesses, outsourcing is a dirty word. Often it conjures thoughts of greedy corporate types taking thousands of jobs overseas but that’s not the true face of outsourcing.

Outsourcing can be an excellent strategic tool if you know how and when to take advantage of it — and best of all it can help improve your productivity, boosting your business’ profits.

So when do you outsource? It boils down to a few simple criteria — profit, length, cost, and skills, or PLCS for short.

Criteria for outsourcing:

  • Profit: Is this activity taking time away from my profit generating tasks, and is it a core essential to making money?
  • Length: Is this a temporary requirement, or something that only needs doing periodically?
  • Cost: Is it more expensive to do this in-house? Or is it cheaper on paper, but wasting the time of someone who could be generating profit instead?
  • Skills: Is this something we are trained to do? Or will we have to pay to train someone up to do this?

Many business functions can be outsourced — from accounts, logistics, and training to PR, IT, and customer service. When you outsource the right jobs, you are then free to invest your efforts into activities that will boost your bottom line.

There is a balance to be struck, which is why it’s worth taking a little more time to apply PLCS. For example, if you’re a small company you wouldn’t want to outsource your customer service as you need to keep that rapport, familiarity, and customer knowledge in-house. However, companies both small and large could benefit from outsourcing IT or PR.

Why spend hours trying to fix computer issues that most managed services could have prevented, or could rectify in minutes? If you value your time as highly as you should, then a few hundred dollars a month for a small dedicated service is probably less than you’d lose by doing it yourself. At worst what is a few extra dollars for peace of mind?

Sometimes outsourcing can have a direct positive impact on profits as well as the indirect benefit of you having more time to focus on core activities. PR and accounting can sometimes be the ‘celery’ of the outsourcing world. Similar to the way that you burn more calories eating celery than it contains, PR can actually help generate more income than the initial outsourcing costs. Good accounting can also be a cost-neutral expenditure too, in the right circumstances.

Trying to do too much yourself can end up costing you a lot more than you think you are saving by not outsourcing. Time that you could have spent connecting with customers and growing your business aside, if you spread yourself too thin you may end up taking a hit to your reputation as your quality of service drops, or you aren’t dealing with customers quickly enough.

Something as simple as being late with a refund can force negative messages into the market. Feelings follow feelings, good or bad, and you want your customers to be talking about you in a good way.

Ask yourself: ‘Do I expect others to use my business?’ and the answer is, of course you do. You’re clearly good at what you do and expect to provide services to others who can’t do what you do as well as you can. You need to follow that philosophy too — if there are things you can’t do, then you should outsource them.

It’s pointless to spend hours doing something that somebody else could do faster, and most likely better, than you when you could be doing what you’re great at and growing your business.

Outsourcing isn’t a dirty word. Applied properly, with consideration, it could completely transform your business.

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