Choosing whether to outsource or not can be quite a conundrum. Seeking the services of another business for a project makes you dependent on them. If they are not able to deliver on time or if they perform poorly, it could cost you clients and your reputation.
However, the truth is, you may not always be able to do everything in-house. From time to time, you may find yourself required to deliver on things that are outside your scope. In such scenarios, outsourcing becomes inevitable.
On the upside, finding a good outsourcing partner can come with benefits for your business such as:
Access to Expertise
Outsourcing enables you to tap into expertise that you may not have in-house. Take, for instance, that you are a hairdresser looking to venture into hair products. While you may fully understand which product ingredients work best for hair, the formulation aspect of them is a different affair. You would require chemists and experts like the Ileezon hair product manufacturer to advise you and handle production.
You may be apprehensive that outsourcing to an expert may rob you of control over the project. However, it does not have to be so. You can institute stipulations in your contract to prevent any steps from being taken without your approval. Contracts also ensure that any proprietary rights are protected.
Access to Increased Capacity
Outsourcing to a larger company enables you to benefit from their larger capacities of operation. This could allow your business to take on bigger or more contracts than your present in-house capacity can achieve. You would also benefit from the economies of scale that come with large-scale operations.
Increased capacity may also be in the form of networks. When you partner with a well-established business they may have a chain of regional or international branches. In the event that you need access to those markets or areas, they could prove useful. Aside from branches, other networks such as shipping contacts and distribution networks are equally invaluable.
Lower Costs
If your business is still in its formative years, you may have limited financial resources. As a result, it may not be possible to hire full-time staff in some departments. Legal counsel, auditing, and accounting are some of the services you may want to consider outsourcing. It would likely be cheaper to pay for consults per session than hiring a professional in-house.
You may also encounter some contracts that require specialized machinery to complete. For, example, if you are a building contractor you may require backhoes to break ground at a construction site. The cost of buying such equipment is often high and thus it may be best to use the services of a firm that owns them.
In some cases, outsourcing becomes inevitable, and it may be the right decision for your business. For example, if you’re running a small medical practice and find yourself overwhelmed with administrative tasks, it may be beneficial to hire a virtual medical assistant to handle your appointment scheduling and patient records, giving you more time to focus on patient care.
Room to Specialize
Delegating some tasks to businesses that specialize in them frees up time for your staff to focus your main line of business and perfect it. This equally streamlines your operations and reduces the number of departments you need to manage. Soft drink companies and alcohol manufacturers have done this for decades by outsourcing the production of their bottles to other firms.
Learning Opportunities
In the long run, you may find it necessary to create in-house capacity for the services that you are currently outsourcing. As such, it would be wise to use the period during which you are still outsourcing to learn. Observe your business partner’s operation and take note of what works as well as what to avoid. This way, by the time you get to set up your own, you will already know the ropes.
Timely Delivery
In today’s business world, convenience and speed are valuable currency. The faster you can attend to your client’s needs the better. Delays are frowned upon and at worst, you risk losing business to your competitors. So, in a bid to beat deadlines, there is no shame in getting some reinforcements.
One of the advantages of working on a project completely in-house is that you reap all the gains. On the other hand, outsourcing means you have to share a piece of your revenue with another firm. This is one of the reasons that most businesses avoid subcontracting unless it is inevitable.
However, there is a question of risks. Big projects may come with great rewards but there is always a chance that they could go wrong. For a small business, the failure of a major project could sound the death knell. It is much safer if you can share such risks with another entity.
Mergers and Acquisitions
When your businesses complement each other well enough, it would be a natural step to merge them. Moreover, given as you already have a working relationship with your outsourcing partner, you can fuse more organically. It is a common practice among law firms that specialize in different areas but share the same pool of clients. There have also been a few of these mergers and acquisitions in the tech world. Dell acquired Perot Systems in 2009 which came on the heels of HP buying EDS.
Conclusion
Admittedly, there are many risks associated with outsourcing. Security breaches, contract breaches, loss of project control, bureaucracy, and inconsistency in quality are a few of the issues you may be wary of. Nevertheless, with a little discernment on who you outsource to and clear contracts, you can emerge unscathed. In sum, the benefits outweigh the risks involved.
