Outsourcing has been used increasingly in the last 30 years, guided primarily by lean resources. It’s simply a matter of working with external providers to perform business functions they’re able to perform better than you can in a cost-effective way. Outsourcing can create opportunities for you to fine-tune business processes and focus on what you do best.
Who Benefits From External Solutions?
All companies can benefit from external solutions. Many small to medium businesses (SMBs) have the misconception that these services benefit only larger companies. But external solutions often can do more to assist SMBs than larger companies.
External solutions can impact your bottom line by helping you get things done less expensively and more efficiently than your business can on its own. The question becomes what should be outsourced and what should remain in-house? Ask yourself, “What processes give my business a competitive edge? What processes are typically carried out in the day-to-day operations of my business?” The answers to these questions depend on your particular business.
Every process is critical to the successful operation of your business. If it wasn’t, you wouldn’t outsource it; you’d change it or stop it. Outsourcing is viable, especially when certain processes overwhelm other facets of your business. That’s why non-core processes are the most common to be outsourced.
However, business processes aren’t isolated, just as employees can’t work in isolation. Both cores and non-cores are critical to the success of your business. Integration is important. You must understand your business to know how each process moves through your company from customer demand to completion.
Advantages of External Solutions
Consider outsourcing when tasks can be completed faster, cheaper, or better by an external partner. When you outsource, you have more time to focus on running your business. An outsourcing provider has economies of scale and can help you perform services more efficiently than you can in-house. By outsourcing, you pay for services on an as-needed basis. You don’t need to purchase additional office equipment and workspace. This saves time and money so you can deliver services more efficiently. Your business will be able to accept extra or larger orders; you might even become a middleman and offer your subcontractors services or products.
As your business grows, your workload increases, and help may be needed. However, the time you have to grow your business stays the same. Time isn’t a renewable resource; it’s one of the most valuable commodities you have as a business owner. Partnering with a staffing firm allows you to spend more time fine-tuning your business.
You won’t have to train new employees, learn new software and other skills, or interview prospective employees and fill out paperwork like tax forms. You won’t have to spend money on employee costs such as taxes, medical, vacation time, holidays, workers’ compensation, unemployment costs, etc. You can gain flexibility and spend more of your money on marketing or advertising to retain your competitive edge.
Ninety percent of companies use staffing services. America’s workforce is changing rapidly as people are looking for the flexibility temporary work provides. Companies are tapping into the flexible labor market to keep fully staffed during busy times. Consider the overwhelming number of businesses that rely on staffing: attorneys, insurance agencies, restaurants, retail, and many others. These companies look to staffing services to assist with a variety of jobs ranging from labor to CEO.
Outsourcing offers a wide array of services and expertise, allowing you to gain access to resources not present in-house. Your business can purchase technology from an external partner that would be too cost-prohibitive for you to replicate internally. Outsourcing also yields advantages in product and process innovation. R&D and product innovation are higher in firms characterized by outsourcing.
Choosing the Right Partner
External solutions must align with your business so your customers remain satisfied. An external partner has to be able to adapt and integrate seamlessly with your business to provide services better than what you can provide in-house.
A good partner is trustworthy and reliable, has a good track record and a viable talent pool, and provides excellent service. You want a partner that will produce the results you’re looking for at an affordable rate. They must be able to provide services better than your business can on its own.
A vendor with a trusted reputation will have references. Make sure your prospective partner listens to your needs and understands your customers. Ask questions about consultant turnover and flexible contract terms. A close working relationship with a reliable partner enables you to resolve business issues quickly and efficiently—often with just an e-mail or a phone call.
Responsiveness of an external partner to changing business needs will help improve relationships with your customers. Integration with the rest of your business is vital. You need to anticipate the market and innovate to keep your competitive edge. This strategy is the heart and soul of your business.
The most important factor in an effective business relationship is a proper fit; partners must align with your company’s culture. You’ll need to meet with representatives from prospective providers to uncover similarities and differences. The right cultural fit makes working together more productive and much easier in the future.
Ultimately, you want someone who’ll help bridge the gap between you and your customers. Seek external solutions partners with delighted customers; they’re your best bet. IBI