Outsourcing is a familiar concept to many entrepreneurs. However only few businesses truly understand the benefits of outsourcing. Small companies routinely outsource their backend processes & supportive functions like payroll, accounting and IT management to compensate for the shortage of resources. Larger organisations turn to outsourcing to cut costs.
Wise outsourcing can provide a number of long-term benefits. These include:
Control capital costs.
Cost-cutting may not be the only reason to outsource but it is certainly a major factor. Outsourcing converts fixed costs into variable costs. It releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors since you are able to pump more capital directly into revenue-generating activities.
Companies that do everything themselves have much higher research, development, marketing and distribution expenses, all of which will be eventually passed on to the customer. An outside provider's cost structure and economies of scale can give your firm an important competitive advantage.
Reduce labour costs.
Hiring and training staff for short-term or peripheral projects can be very expensive and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.
Start new projects quickly.
A good outsourcing firm has the resources to start a project right away. Handling the same project inhouse might involve taking weeks or months to hire the right people, train them and provide the support they need. And if a project requires major capital investments, the startup process can be even more difficult.
Focus on your core business.
Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer. It can help managers set their priorities more clearly.
Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.
With so many benefits of outsourcing, what are you waiting for? Identify the areas which you can outsource. Select a couple of the smaller areas to outsource first, so that you can learn from the experience, see the proof with your own eyes, and justify the ROI. Once you begin outsourcing, you won't believe how much it will add to your bottom line, the time it will save, and you will be able to reap the benefits of outsourcing too. Go ahead, get started now.