Friday, December 13, 2019
In order to achieve greater efficiency, operational performance and much more, small businesses have many compelling reasons to outsource, e.g. to save money, improve performance, avoid recruiting headaches and more. Despite the obvious benefits, many businesses are unsure how to get started with outsourcing and, as a result, are hesitant to proceed. The process begins by considering which workflows to outsource and which ones you should keep in-house. Generally, the most successful tasks to outsource are low-impact and repeatable but those ones consume a lot of time and resources like administrative work, accountancy services, transaction support, and data entry.
Because outsourcing began as a business strategy, all of these low-impact tasks have added up to quite a large industry. Research shows that business process outsourcing in the USA generated more than $23 billion in revenue in 2018 and that the overall market is projected to be worth $262.2 billion by 2022. There is a demand for these services, and it’s largely driven by the desire of business leaders to make their organizations operate more efficiently. With the right partner, outsourcing is a way to realize that goal.
Outsource non-value-adding processes
Most back-office processes are non-value-adding, i.e., tasks that must be performed to maintain operations but that don’t help a company grow. Although organizations can’t neglect accounts receivable, transactions or reporting, these activities don’t actively bring in new clients and revenue, which is where a back-office outsourcer comes into play.
Back-office work is ripe for outsourcing because it requires a lot of institutional resources that could be utilized for other business functions, particularly for creating growth. Imagine that a business wants to open another location, add a product line, recruit a top executive or revamp its online presence. These initiatives take significant investments of time and energy, but if decision-makers also have to worry about routine tasks, they will only be distracted from opportunities to grow their businesses.
By sending those workloads off-site, decision-makers have more resources available to focus on growth. Essentially, they replace tasks that don’t add value with tasks that do. One survey of 1,700 companies showed that outsourcing accounting tasks leads to greater profits, better financial insights and more referrals. The reason is quite obvious: Outsourcing allows companies to focus on clients instead of on themselves.
It should be noted, though, that outsourcing back-office functions works well if the process is structured and Company’s goals are specific. Without the proper preparation on the Company’s, it is easy to end up with a failed partnership. Investigating thoroughly, there are a number of steps that can be taken to ensure a successful partnership.
Routine tasks need proper talent and knowhow by the Partner
Outsourcing leads directly to greater efficiency because it allows companies to rely on top talent and best practices to handle routine workloads. As a strategy, outsourcing allows a business to get the best talent for each function and focus its hiring efforts on talent that will bring value to the organization, and build up the business. Meanwhile, a third-party outsourcing partner can build teams of individuals whose work is not essential to the business’s value or revenue generation.
High-quality outsourcing partners who use offshore talent can deliver talent (degreed, certified individuals) for a much lower cost. Outsourcing means not having to worry about hiring, training or retention, because the outsourcing partner handles those functions.
Customer care is another example of a function that could be outsourced. Many companies need customer support but would find building out an in-house call center to be a waste of resources. It makes sense, then, for those businesses to outsource call-based customer support to a company that has the infrastructure, training, hiring protocols and management process already in place. Be careful, though, when it comes to your contract with your outsourcing partner. Make sure there’s enough flexibility in the contract to ensure quality customer service.
Other back-office activities can be outsourced in similar ways. A business needs accounting for operations, but accounting is not a differentiator for customers. It could easily receive financial reports without having to do all the busywork, including data entry, analysis and invoicing.
By outsourcing nonessential tasks, companies are in better positions to attract higher-level talent who are more likely to stay with the company over time. Outsourcing frees up resources to be used toward more effectively recruiting talent in key revenue-generating roles. Of all the reasons to consider outsourcing, the most compelling is that it can clear away obstacles to growth.