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How to Implement Outsourcing for Your Business

How to Implement Outsourcing for Your Business

These days, running a business is more difficult than ever before. With so much uncertainty, many companies are looking for ways to slash costs and do more with less in anticipation of shrinking profit margins. One way you can do so is by outsourcing. However, like anything else, outsourcing can be done incorrectly. To make sure you actually benefit from outsourcing, below are some tips and strategies on how to outsource correctly.

Determine Your Goals for Outsourcing

Outsourcing isn’t something you should do without a good reason. In most cases, it’s best to complete work within the company instead of handing it off to outsiders. However, there are situations in which outsourcing can be a wise course of action. You may find that you and your employees simply seem to run out of time at the end of the day. If you’re not able to complete all the work you need to and can’t afford to hire more in-house employees, outsourcing certain tasks may be preferable. About 49 percent of companies outsource to free up resources. Outsourcing is also a way to obtain expertise your employees don’t have. You may also want to outsource as a means to slash costs. Overall, make sure you have a strong rationale for outsourcing a certain business task.

Determine What You Should Outsource

Unfortunately, not everything can or should be outsourced. You should certainly be very deliberate about the processes and tasks you choose to have completed by outsiders. Although you can try to exert some control over the process, overall, outsourcing does involve giving up some direct control and responsibility for specific aspects of your business. With this in mind, you should not outsource something that is considered a core business function. If your company manufactures grocery store products, direct supervision of the production line is not something you should outsource. However, directly responding to customer service phone calls is something you can more than likely benefit from outsourcing to inbound call centers. Doing so can free up resources that can be re-directed to your core business functions.

Understand All the Costs Involved

One of the reasons why so many companies outsource is to obtain some kind of cost savings. Unfortunately, outsourcing a specific business task can end up being more expensive than you had expected if you’re not careful. When you interview different companies for the work you need, make sure to discuss the full range of the costs involved. You should be aware of exactly what you are paying for when you will pay for it and how often you will pay for it. If you don’t pay attention to the details, you may end up being hit with bills for fees and other hidden costs you weren’t even aware of. Make sure the totality of the costs involved will be specified in any contract you agree to with an outsourcer.

Mitigate Other Outsourcing Risks

Outsourcing may also entail other risks in addition to hidden costs. These risks may include security concerns regarding important data and information. This can, for example, include access to trade secrets by the outsourcer. You don’t want your competitors to be able to obtain those trade secrets just because they were in the hands of an outsourcer. This can also include sensitive data regarding your customers. If that data is stolen, your customers could become the victims of identity fraud. Possible bad quality is also another concern. Avoid this issue by ensuring that quality standards are part of your agreed-to contract. You should be able to reject any work product that is not up to snuff.

Track Your Outsourcing Over Time

Like any important part of your business, you shouldn’t simply pay for a service and then forget about it. Instead, you should be tracking your outsourcing over time. This should include the costs involved, the work product received, and the benefits for your organization. Specifically, you should determine KPIs, Key Performance Indicators, to track over time for each outsourcing service you contract with. This can give you a more rounded view of whether or not you are actually benefiting from outsourcing that business process and whether or not adjustments should be made based on the data trends.

Overall, be serious about developing working outsourcing strategies for your company. Make sure you are outsourcing the right business processes for the right reasons. Make sure you understand all the costs and risks that will be involved. Make sure to track the progress of your outsourcing efforts over time. Doing so will increase the chances of your business benefiting from your outsourcing strategies.

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