Home Business A Guide to Outsourcing: Definition, Benefits, and What to Outsource

A Guide to Outsourcing: Definition, Benefits, and What to Outsource

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What is Outsourcing?

If you’re a business owner, you’re probably already familiar with outsourcing. If not, it’s when you (as a business owner) hire another company to take over certain business functions. This can be hiring an individual (a freelancer or contractor) to work for your company, or completely turning over a function of your business to another company. It can even be something as simple as using software developed by another company to manage certain functions.

Benefits of Outsourcing

Once your business starts growing, it may get hard to continue managing everything in-house. Outsourcing allows other companies to take over the important business functions that still need to be done while you focus on core business matters. It also prevents you from having to hire additional employees (which will cost you more over time) or placing extra tasks on your current employees— thus keeping your current employees working more efficiently.

Another benefit of outsourcing is that you can hire experts that are professionally trained in the areas you want to outsource. This means that there will be fewer mistakes, and you’ll save more money because of this. 

Costs of Outsourcing

There are a few downsides to outsourcing, but it’s nothing that can’t be managed. Many people fear that outsourcing means that they’ll have to turn over a portion of their business to an overseas company— but this isn’t always the case. Domestic outsourcing is possible for many companies in the U.S.

Another downside of outsourcing is that you lose control over the business functions you once had full control over. This is why it’s important to research the companies you want to outsource to, to ensure that they’re worth the extra effort. On the other hand, what you may think you need to outsource is only a temporary job that may only require a consultant, or it can be easily managed with a software system. These options will leave the majority of control in your hands.

What Businesses Should Outsource

Customer Service

Outsourcing to a contact center may be necessary for businesses who sell products online. Just make sure that the company you outsource to understands how you want your customers to be treated because they will be a direct reflection of your company.

In addition to outsourcing your customer service functions, you should also invest in Customer Relationship Management (CRM) software. This will allow you to gain better insight into how your customers interact with your company.

Financial Aspects

Accounting, bookkeeping, taxes, and all other financial aspects of your business are extremely important. Because of this, you’ll want a financial expert to manage this part of your business.

You can also invest in accounting software (and a financial expert) to help keep track of the monetary aspects of your business. Errors in accounting can cost you much more money than investing in the necessary people and/or equipment

Human Resources

HR services handle all things related to your employees. Depending on the company, they can take full control over these employee-related matters:

  • Resume screening
  • Interviewing
  • Training and onboarding
  • Employee benefits and salary increases
  • Misconduct and other issues
  • Termination

Information Technology

IT is one of the most specialized functions of a business, so it’s easily one of the most outsourced areas of business. Due to the availability of domestic (and foreign) IT expertise, business owners can outsource managed it services legal with more assurance.

Sales and Marketing

Most entrepreneurs understand the basics of marketing, but outsourcing this part of your business to professionals can take your business to the next level. Marketing firms are skilled in each type of marketing and can figure out which strategies work best for your business.

Another option would be to invest in sales and marketing software. This software can help you stay organized and collect your sales and marketing data, making future analyses much easier.

Managing Your Business Functions

If you choose to go the software route alone, you can see that there are many different business software that you’ll need. Fortunately, you can find business software that has a number of applications that can cover all of your business needs. You’ll also need a managed services provider to help manage these applications.

As for outsourcing to other companies, there’s only so much you can manage. However, there are a few things that you can do to have peace of mind when outsourcing to another company:

  • Thoroughly research the companies you wish to outsource to
  • Make communication a priority and make sure the companies understand your business
  • Use project management software, if possible, to make sure all work is getting done
  • Conduct regular meetings, especially if you can’t use project management software

Outsourcing can be a great option for small businesses, especially those that are growing and expanding. Just do your research and look into all options (including consulting and business software) before making any final decisions.

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