Everywhere you look in the world of big business, you hear the word “outsourcing.” All the major companies are at it, from the banks to the airlines to the global insurance companies. Maybe this is the reason that small business owners and entrepreneurs assume that outsourcing is not something they need to think about.
That is a dangerous assumption to make, and when you look at the advantages that outsourcing can bring, the first thing you notice is that they are just as valuable to the small business as they are to the global giants. In some cases, where cash flow is king and business efficiency can mean the difference between a thriving outfit and another failed startup, it can be even more vital for a small business’s long-term viability to consider outsourcing.
What can you outsource?
Essentially, you should at least look into outsourcing any function that is core to what you do. If you are operating a PR company, that means you’re an expert in PR, and not in bookkeeping, IT support, HR and marketing, so these should certainly be up for consideration. If you operate out of an office, there are also aspects such as building maintenance and catering that you really don’t need to be thinking about.
Doing everything better
Ask someone what they gain from outsourcing and that last aspect of “not having to think about” non-core functions are the one that springs to mind. It’s a valid point, and outsourcing means you can focus your attention on doing what you do best, and doing it better, faster or cheaper than the rest. But that is only half the story.
When you outsource, you get access to specialists that you would not otherwise have at your disposal. Suppose you go from in-house IT support to outsourcing it to a company like Probrand, for example. This is a company that lives and breathes IT support, so it is natural that they will have access to the latest tools, knowledge and expertise. With the best will in the world, there is no way that an in-house IT team working for a company that is not in itself specializing in IT will be able to come close.
The same apples to your HR, finance function and whatever other areas you choose to outsource. Why make do with what you can find when you can utilize the most experienced brains in the business?
Outsourcing non-core activities save your business money on a number of levels. You will be spending less on technology, infrastructure and staff, while at the same time, using the outsourced resources far more efficiently.
In essence, the cost savings come from three areas:
Salary costs. If you are just using hourly services from an external provider as and when needed, that is clearly cheaper than paying someone full time.
Employee costs such as insurance, pensions and benefits.
Indirect costs including utilities, office space, hiring costs and administration.
It is worth keeping in mind that when you take the above factors into account, the total cost to a business of employing someone is around 1.7 times their gross salary.
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