Businesses these days have to do a lot more with a lot less. After experiencing a worldwide pandemic and facing so much economic uncertainty and drastic business adaptations, many companies are looking for more financial stability as well as flexibility. A business tactic that can possibly provide both is the outsourcing of certain business processes. Outsourcing can have many benefits such as saving money on labor costs in your primary location, increasing your customer service efficiency, offering 24hr services for customers, etc. However, like anything you introduce to your business, outsourcing services can also be done incorrectly and become more of a burden than a benefit. With that in mind, below are five tips for businesses that are considering outsourcing.
Determine What Should Not Be Outsourced
Outsourcing can be beneficial to a business. However, it is indeed possible to take it too far. If you are essentially paying someone else to run your business for you, what is the point? Further, you should never outsource a service that is going to transfer the burden of leadership away from you and your primary business location. Primary management of your business should remain with you and your trusted leaders, you should only have outsourced services for the things you and your team cannot handle. Outsource things that don’t have a huge bearing on the core functions of your business but are rather housekeeping necessities, or services that help your business run more smoothly overall.
Instead, you need to determine what exactly concerning your business should not be outsourced to an outside third party. Things that should not be outsourced include your core business functions and regulations. If you run a hamburger restaurant, for example, directly managing the employees that make your burgers is a core business function. However, completing your own bookkeeping is not. Bookkeeping, while required for accounting purposes, is not directly related to the product the customer receives when they order a hamburger and can be done by a trusted and reliable third-party accounting service.
Determine Your Objectives for Outsourcing
You shouldn’t be outsourcing a task just to outsource it. Instead, there must be a logical rationale behind this decision. You must have an objective or goal you are trying to achieve by bringing in a third party to complete some kind of business task for your company. For example, you may feel that you and your employees are being stretched too thin. As a result, you may not have enough time to answer every single phone call you receive from customers. If this is the case, consider outsourcing a call center, this may be the best choice for you. Make sure there is a clear objective behind outsourcing that makes sense. This can be saving money, freeing up time and resources, or gaining access to expertise and skill-sets you do not have in-house among your employees.
Many companies hire outsourced services for aspects of their company they simply don’t know how to run themselves, or to add services for their customers they may not have before. For example, if you own a start-up based on a specific product, you may be able to create a quality product, but you may not know how to do bookkeeping, or how to invest in a store front, or you may not be able to handle the customer support needed to keep your business’ reputation in good standing. Trends such as these can show you that your business needs to grow and you need help to maintain this expansion. Outsourcing accounting services, customer service specialists, or a commercial property manager can help you keep every aspect of your business running smoothly and expanding so you don’t have to worry about juggling all of it yourself.
59 percent of businesses outsource to save money. If that is your goal, you should be careful. There may be hidden costs to outsourcing that you may be unaware of. This can include things like start-up fees, service fees, and more. Make sure you have a firm understanding of the total costs of the service you are outsourcing. Discuss this thoroughly with each candidate, and have different candidates submit bids for the work. When examining different bids, be careful regarding the lowest bidders. Sometimes you get what you pay for in terms of lower quality of work. Overall, make sure all costs are firmly agreed to in the final contract.
Consider also, the cost benefits you will receive from having this work outsourced. If you are attempting to outsource an aspect of your business that is critical to your expansion and that will increase your own sales and overall growth, it may be worth the extra cost to get a high-quality and reliable third party to outsource this work to. It may cost extra now to get the highly-rated organization for outsourcing, but if implementing this outsourcing can give you a big return in your business sales, it may be worth it. Always consider both the cost and the potential effect of hiring this service for your company.
Many people assume outsourcing a business process means ceding complete control of it away to that third party. This is not a good idea if you want to maintain the level of quality you expect. It’s even more important when the level of quality provided by that third party could affect your reputation with customers. Often, outsourced work, especially if you are outsourcing overseas, may be of generally lower quality depending on the service rendered. It’s important to keep track of the details of the service and how your consumers are reacting to this new implementation. For example, if you are outsourcing a customer service center in another country, you have to make sure their employees are fluent in written and spoken English so they can communicate effectively and efficiently with your consumers who need help. Other outsourced services such as manufacturing will also have quality concerns that you need to be wary of as many other countries have different standards for manufacturing processes.
Overall, you must still exert control over the end product of that third party. Include stipulations in the contract regarding accepting or rejecting work based on the quality of output so that you don’t get stuck in a contract with this company. You may even want to assign one of your employees to look over the work being done to ensure that it is indeed up to your standards. If you are outsourcing the manufacturing of your product, you can ask for the third-party company to send you a sample of the product as they make it themselves. This way, you can ensure that the product meets your own standards. Similarly, if you outsource a customer service center, don’t be afraid to ask to listen to a demonstration of the calls, ask for recordings of interactions with customers, even call them yourself sometimes to do your own quality checks if you want to be really sure they meet your standards. Be sure to consider the third party’s reviews from their other partners, and their general reputation in their area and abroad if applicable. Businesses who outsource services too quickly can make mistakes that tank their company’s growth instead of helping them expand.
Protect Customer Data
As part of the process, an outsourcer may need access to customer data or some confidential company information. This data is often of a sensitive manner. It could include names, street addresses, credit card numbers, and more. If this data were to fall into the wrong hands, it could be used to steal your customers’ identities and defraud them of thousands of dollars. Make sure security concerns regarding customer data are a key part of any contract you agree to. Just because you are giving work to a third party does not mean that you can be lax about security regarding things like customer data. It is still your legal and moral responsibility to ensure that your customers are protected. If there is no need to provide this information unnecessarily, never give this information to anyone you are working with. It only takes one unregulated employee to steal customer’s information. Security is of the utmost importance, especially since the pandemic has moved more and more businesses online. Make sure that the company you are outsourcing to has a similar view of cybersecurity and that they have proven measures in place to protect your business’s sensitive consumer information.
Outsourcing can help businesses by slashing costs, adding services, freeing up resources, and giving small companies access to the talent they need. However, as with all business decisions, you can make some big mistakes while outsourcing. Make sure you are outsourcing for the right reasons, and take time to find the right third party to work with. Look for services with proven reputations, strong security regulations, and reasonable costs. Work on drafting a contract with the company you choose that will ensure that you do get significant benefits out of that relationship.
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