How to take the risk out of outsourcing

A growing number of businesses are looking externally to carry out aspects of their operation. Is this trend the result of the recent recession?

Businesses always encounter periods in which they need to draw upon the expertise of someone else to carry out a function that will improve their business or to cut costs where staffing is concerned. But the question we’re left with is if the economic climate wasn’t so challenging would they still be so keen?

New businesses usually tend to take on every aspect of their operation themselves but as they start to grow, the idea of outsourcing
becomes very appealing and many see it as a way of cutting costs and buying expertise without the hassle of employment issues. Like a wave effect, eventually that same business will bring everything back in-house again to re-establish control when they become even bigger.

There are a number of benefits of course to outsourcing, most notably the fact it allows you to concentrate on what you’re good at. It provides the perfect opportunity of acquiring the skills of external experts who can help give you a competitive edge and can reduce staffing costs.

However, there are as many pitfalls as there are advantages. You don’t have direct control, service delivery can be hit and miss and you can occasionally encounter problems with confidentiality.

There’s also the issue of training. If you’re outsourcing call centre work, they have to be able to deal with every eventuality facing them and how long is this training going to take and cost?

Obviously if you’re outsourcing overseas there are also big cultural differences. And when people already have staff and say they’re going to outsource does that create issues with the current workforce?

It is for these reasons why 50% of outsourcing fails.

But lessons have been learnt and there are factors which give outsourcing a better chance of working.

If you want to outsource, use it for secondary functions only such as IT, Lead generation, HR, and PR & Marketing.

There’s also a greater chance of success if time is spent building a relationship with the outsourcing agent and the expectation needs to be very realistic. Business people need to research the provider’s track record, take bank references, check out how stable they are and create a ‘ways of working’ document between the two parties.

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