7 Benefits Of Business Outsourcing And How To Do It Right

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Sometimes the best way to grow a business is by looking outside the organization.

While it might make sense to establish a skilled in-house team, outsourcing work can be a strategic move, especially as companies face labor shortages and increasing production costs.

Outsourcing is a cost-effective option when your business needs to scale up market share, staffing, and production rapidly. There are many advantages of outsourcing, and, if done correctly, it will help you maximize the performance of your staff by making them more efficient and allowing them to focus on their core responsibilities.

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What Should You Outsource?

The best processes and tasks to outsource take a ton of time to execute and aren’t a core competency of your team.

For example, the first function many eCommerce businesses outsource is accounting and bookkeeping. If you aren’t an accountant, managing your accounts can be time-consuming and take away valuable time from working on more important tasks in the business. If you get it wrong, you can wind up with compliance and tax issues.

Other everyday tasks to outsource are customer support, order fulfillment, and writing, just to name a few.

With the right processes, you can outsource nearly any aspect of your business. However, it is generally a best practice to retain any part of the business in-house that is a core competency or competitive advantage.

7 Benefits Of Business Outsourcing And How To Do It Right

This blog post will take a look at seven benefits of outsourcing work and how getting external help can be the right choice for your business.

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1. Focus on what’s important

As an entrepreneur, you have a goal and vision for your company. You’re an expert in the product you’ve built or the service you’ve developed. So your focus should be on doing whatever it takes to grow the business rather than administrative tasks.

Outsourcing services allows you to keep your focus on the core business. By contracting out time-consuming non-core areas of the company, like IT or administration, you can concentrate on more meaningful work that will significantly impact your business operations.

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2. Control cash flow

When you outsource, you convert a fixed cost (a full-time salary) into a variable cost (a pay-what-you-need service). This frees up your cash flow for investment in other parts of your business.

For example, back-office tasks typically come with expenses like office space, furniture, copier paper, etc. Even remote teams come with costs, like equipment and access to software tools. These expenses don’t seem like much, but they add up quickly.

You may be able to squeeze one person into your current office, but if hiring that new assistant means moving to a bigger (and more expensive) space, it may be cheaper to hire a virtual assistant agency to meet your needs. Yes, the outsourcer technically builds their costs into the fees they charge, but those overhead costs are spread out across all of their customers.

You could funnel the cash you save into improving your products or running marketing programs. This is especially useful at the early stages of new projects, like launching a new product or reaching into a new business vertical.

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3. Improved communication between departments

Despite the best efforts of supervisors and managers, communication between departments can often be difficult. To improve communication, it is important for supervisors to understand the employees they are supervising and for employees to be able to understand what their supervisor wants them to do. Additionally, effective communication requires that both parties have a common understanding of the situation at hand. When all of these factors are in place, departments can work together more effectively.

4. Budget Flexibility

Smaller businesses can maintain room in their budgets by engaging the services of outsourced business process consultants on a fractional basis. That means they can acquire the necessary senior-level expertise on a part-time and lower-cost basis.

5. International expansion

In some cases, outsourcing can help expand your company’s reach overseas or into neighboring countries.

Taking advantage of a remote and global workforce makes gaining access to new markets more accessible and less expensive, especially if you can bypass many infrastructural challenges needed to set up a physical location.

By outsourcing, you can avoid the cost of relocation packages for employees and other expenses, like equipment and rent, when setting up a new office.

6. 24-hour production

A global talent pool means you can overcome the eight-hour workday. A traditional work environment often runs only from 9-5 in your time zone. By outsourcing tasks and with proper planning, there is no reason for production, IT, or customer support to shut down.

By hiring freelancers in other time zones, you have the opportunity to create a 24-hour production cycle. This means managers can have completed work waiting for them in their inboxes when they start the day, and they get projects back to clients faster than ever before.

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7. Gain a competitive edge

Outsourcing can help small businesses punch above their competitive weight. Companies can maintain a smaller core of employees while accessing resources around the country (or around the globe) that allow them to tap into a higher level of experienced talent or offer more services at a better price than their competitors.

When profit margins are tight, providing better customer service or quicker turnarounds on projects can make a huge difference in client retention or attracting new work.

Conclusion

Outsourcing is finding the most efficient way to run and grow your business. It’s not perfect for every situation, but there are many advantages to developing and retaining your internal staff.

Hiring contractors can help you handle a wide range of challenges while keeping costs under control. Outsourcing can help companies discover new markets or help business owners focus on what they do best.