One of the greatest misconceptions in the business world is the idea that outsourcing is, for some reason, a temporary solution to your problem. In reality, even some of the world’s largest companies consistently outsource. In fact, for a lot of them, handling certain functions in-house isn’t even an option. Reasons behind this are numerous but all you need to know is that these conglomerates definitely wouldn’t make a call that will cost them productivity or efficiency in the long-run. For an SMB, things are a bit different. The choice might not be as clear-cut and in order to ensure that your plan doesn’t backfire, you would have to create a valid outsourcing strategy. Here are some tips.
1) Know why you’re outsourcing
Outsourcing brings many benefits to the table, yet you need to know why you are doing this precisely, in order to make a proper evaluation of the cost-effectiveness of this move. For instance, some companies outsource in order to avoid unnecessary diversification of their in-house operations. Others do so to cut costs. Then again, there are those who don’t have the luxury of time to wait for their in-house team to become trained, experienced and organized enough to give some tangible results. Either way, knowing why you’re outsourcing is the first step in creating a solid outsourcing strategy.
2) Setting realistic expectations
The main reason why so many companies decide to outsource is in hopes of achieving better results. Still, how much better is often a point of massive misunderstanding, mostly due to the fact some of these SMB managers set unrealistic expectations. Once these expectations aren’t met by the company you’ve outsourced to, it may appear as if you’re not getting your money’s worth, which is clearly not the case.
In order to avoid this, you need to define your main objectives and make them easily measurable. While negotiating with the company you intend to outsource to, you need to present these expectations and ask them will they be able to meet them. Sure, there’s always a chance that they won’t be 100 percent honest with you or that they will make a miscalculation but at least you’ll know for sure that your expectations were not the problem.
3) Offshoring or nearshoring
The difference between offshoring and nearshoring is a huge one both in the number of options you have available and the logistical issues. For instance, if you’re outsourcing to a nearby company or to an agency in another state, you will have the privilege of visiting their headquarters more often. In this way, you maintain more control over their actions and gain a more efficient way of micro-managing your company.
As for the offshoring, you get more potential partners and lower overhead of outsourcing, due to the fact that some regions provide much more cost-effective services. The greatest problem with this issue is that you won’t have the same level of control, as well as the fact that you might have a problem hiring someone who is reliable enough. Luckily, online platforms like 2Easy specialize in companies outsourcing various digital services in Hong Kong. This way, they can do the prospecting in your stead and, therefore, make it more efficient and trustworthy.
4) Consider outsourcing models
The next thing you need to know about outsourcing is that there are different models that can be differently integrated into your current business structure. For instance, staff augmentation is much different than project outsourcing. On the other hand, functional outsourcing and dedicated development center may require even further logistical improvement on your part, making them into situational solutions. All in all, before you even start thinking about making a choice, you need to consider outsourcing models.
5) Starting out slow
Finally, outsourcing is not for everyone. As a long-term solution, it might be inferior to the option of starting an in-house department, then again, this might depend on the nature of the function you are outsourcing. Outsourcing your HR is a better short-term than a long-term solution, while the same can’t be said for your accounting, IT or even customer services.
On the other hand, even some of the world’s largest conglomerates still heavily rely on outsourcing. In fact, some of the industrial giants, like Apple, are notorious for outsourcing their manufacturing to China and other countries in that region. The greatest problem with these models is that you simply can’t know which of them suit you until you actually try. Nevertheless, this kind of experimentation or A/B testing seldom comes cheap.
At the end of the day, whether you should outsource is not an easy decision to make, however, it isn’t even the hardest outsourcing-related decision you will have to make. Who you should outsource to, what kind of expectations should you make, how you should negotiate and communicate with them are just some of the issues you will have to resolve prior to venturing into outsourcing. Needless to say, when it comes to this, one-size-fits-all solutions don’t exist. What’s good for everyone else might not work in your case. The only way to know for sure is to try it out.