Because the internet has connected people worldwide, the outsourcing industry has grown by leaps and bounds over the past two decades. Another reason for this growth: Outsourcing gives entrepreneurs access to a greater pool of talent and low-cost labor. Their ability to delegate responsibilities helps them free up more time.
But outsourcing is not always the best option: Many business owners, in fact, are starting to figure out that not all work should be outsourced. In some categories, like customer service, outsourcing can even make a bad impression with customers.
In other categories, outsourcing can mean subpar work, such as with communication or writing duties. Then there are the times when entrepreneurs wish they had outsourced sooner, as that would have meant less time wasted while they (unwisely) tried to do everything in their business.
Though finding competent people in virtually any line of work is possible, what works with one business may not work for another. So, what are the pros and cons of outsourcing, and how do you decide?
Writing in LinkedIn, Charlett Adams described how, after becoming owner of a commercial cleaning company in 2011, she found herself inundated by client demands and meetings. So, she tracked her time and thought carefully about what roles to outsource: She hired a bookkeeper, a CFO-level person, an IT person and someone to handle her marketing, as well. By outsourcing, she freed up the time she needed to focus on her company’s growth.
You may want to emulate Adams’s example. If you take the time to think strategically about what you aren’t good at, what you don’t have time for and what you need help with, outsourcing might benefit your business. If you leap without looking, though, outsourcing could end up costing you more than you bargained for.
The main benefits of outsourcing boil down to three things:
With the caveat that different businesses have different needs in terms of the tasks that need to be completed and the roles that need to be filled, here are several examples of roles that can be outsourced:
In September 2010, Virgin Airlines had to ground all flights for nearly 24 hours, leaving 50,000 passengers stranded. The problem? Virgin had outsourced its internet booking, reservation, check-in and boarding system to IT provider Navitaire. The latter company was tasked with identifying and resolving mission-critical system failures within a short period of time; but on this occasion, things didn’t go so smoothly.
Not everything you outsource will necessarily have such an immediate and drastic impact on your business. If the problem you need to solve is occurring on the other side of the world, all you can do is trust your vendor to deal with the issue in a timely and competent manner.
Brian Scudamore, founder and CEO of O2E Brands, said his company used to outsource overflow call volume to a Vancouver-based call center. Alas, O2E Brands saw conversions begin to decline and its company culture begin to slip. This is when it decided to make customer service 100 percent in-house again, and it hasn’t looked back.
While keeping certain functions in house may not save you any money, it gives you more control over the quality of work that’s produced and the ability to better define and preserve your company culture.
Any aspect of your business that you believe is a differentiating factor or unique selling proposition should be kept in house.
Conor Wilson, co-founder of Sproose, wrote on Fora that he used to struggle with not being an expert in his field, thinking he had to know everything there was to know about a specific niche before establishing a business in it. Then, realizing that he could leverage outsourcing to build his business, Wilson thought about what problems he could help solve, and settled on laundry pickup and delivery.
Like Wilson, many entrepreneurs are paralyzed by the overwhelming number of options available. They concern themselves with every step, thinking they need to know everything. This is, perhaps, the biggest trap of all — not getting started. Outsourcing offers a low-cost way for entrepreneurs to go into business for themselves, and tap into the knowledge and expertise of skilled and qualified people, without the added risk and cost of hiring full-time employees.