Outsourcing is the contracting out of a business function to an external provider, rather than do it yourself. Businesses of every size outsource certain functions; you don’t need to own a bank to have a bank account, or run a cell network to make a call. A rapidly growing business can use also use outsourcing to add expertise, either by introducing a new service or by contracting out a particular business function.
Mature business may see outsourcing as a way to reduce costs and gain efficiency. They may contract out activities that are already done in-house — such as human resources or information technology services — or they may find an outsourcing solution that can create a new customer benefit, such as a 24-hour customer hotline service.
Business owners often adopt outsourcing to enable them to focus on their core business.
In order to determine what can be outsourced, you need to conduct a thorough review of your business practices and look at where you’re spending the most money. When you do this, keep the following in mind:
The great thing about outsourcing is that it frees you up to spend more time in activities that grow your business. This is especially true of administrative tasks, so you could look at outsourcing:
Some business owners feel that it’s a waste of money to outsource a task (and paying a high hourly rate) that they think they should be doing themselves. But depending on how fast your business is growing and how much time you’re spending on admin, you could be actually losing money in the long run if you’re best to spend your time building sales.
If you have need either new skills or more staff to fulfill a sudden increase in demand, and you’re unsure if you need a full-time person, consider hiring contractors for a short-term project. Whether it's for a couple of weeks or a few months, hiring a contractor fills the gap and lets you identify if the need is permanent. If the demand or need settles down, you can end the contractor’s role without the same issues as if they were a full time employee.
By bringing in a contractor for short-term projects, you’ll:
Contracting doesn’t always have to be for labour. You can also contract other businesses to help with any short-term demand issues. For example;
Contractors often quote a set hourly rate, or a project rate. To make sure you’re getting value you should:
Getting the most out of contractors is down to making smart decisions when you hire them (reference and reputation checking), making sure you have a clear description of what you want them to do, and clearly worked out contract agreements.
It’s worth any business owner’s time to take a careful look at the range of tasks in their business and seriously ask themselves if keeping employees on staff to perform those tasks is cost-effective, or if they couldn’t be done faster, more cheaply and more effectively by outsourcing them. Although this is particularly true of administration and IT, it’s still worth your time to decide if other tasks could be delegated to a contractor as well.It’s worth any business owner’s time to take a careful look at the range of tasks in their business and seriously ask themselves if keeping employees on staff to perform those tasks is cost-effective, or if they couldn’t be done faster, more cheaply and more effectively by outsourcing them. Although this is particularly true of administration and IT, it’s still worth your time to decide if other tasks could be delegated to a contractor as well.
Contracting can also lead to a range of synergies and partnerships with other businesses that can help build sales and future opportunities.
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