Outsourcing can make your business more productive and more profitable – if you know how to take advantage of it.
When we think of outsourcing, call centres in far-flung places like the Philippines typically spring to mind. However, increasing numbers of New Zealand businesses are taking advantage of local ‘Kiwi’ outsourced business service providers and cutting costs as a result. Yes – outsourcing can save you money, but that’s not the only reason to do it.
1. Benefits you could achieve by outsourcing:
- Control capital costs. Outsourcing converts fixed costs into variable costs and releases capital for investment into revenue-producing activities elsewhere in your business.
- Increase efficiency. Doing everything in-house creates higher administration, marketing and distribution expenses that you have to pass on to your customers. An outside provider’s economy of scale can give your business a competitive advantage.
- Reduce labour costs. Having in-house staff for non-billable activities is expensive, and 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. You may need outside help to free up time to undertake new projects that don’t warrant another full-time employee. Outsourcing gives cost-effective access to resources and expertise that can grow with your business.
- Focus on your core business. Every business has limited resources, and every owner or manager has limited time. Outsourcing can give your business back time to focus on what serves your customers, generates income and grows your business.
- Level the playing field. Outsourcing helps SMEs look and feel "big” by giving them access to the resources, technology and expertise that large companies enjoy.
- Reduce risk. Employing one person in-house for business processing is a bigger risk than outsourcing to a professional, credible company with a team of experts and separation of duties.
2. Knowing what to outsource:
You probably already outsource parts of your business without even thinking about it. Who does your marketing, graphic design, printing, website design, HR consulting, or manages your IT? Outsource the work you don’t need an on-site employee for:
- Non-billable activities that aren’t central to generating profits or competitive success.
- Routine jobs that waste valuable time and energy.
- Tasks that recur in cycles.
- Jobs that are less expensive to have someone else do rather than doing them in-house.
- Activities that can be done in-house, but drain resources that could be better used elsewhere.
- Jobs requiring specialised skills that don’t warrant employing a full or part time person.
- Activities that people don’t enjoy doing.
Outsourcing is a viable option for everything from payroll, accounting and bookkeeping, office administration and paperwork, phone answering, manufacturing and delivery to customer service, employee recruitment and training, property management and computer services.
3. How much money could you save by outsourcing?
The average savings from outsourcing internationally are up to 40%, with small to mid-sized businesses making even bigger savings. We’ve surveyed many New Zealand business owners and asked them: how much does it cost to sit one full time staff member down in your office per year? They’re horrified that it actually costs $60,000 to $95,000 per year!
4. Choosing an outsourcing partner.
The most important aspects to consider are reputation, experience, size and communication. Do they have a team of highly trained, articulate and well educated employees? How will your data be protected and backed up? Choose a company that has a record of delivering services that are cost-effective and confidential.
5. Focus on the value, not the cost.
Many business owners think they can save money by doing it themselves. Outsourcing costs money – but so do time and mistakes. Less time spent, quicker turnaround and higher-quality results are worth spending money on.
Outsourcing may well prove to be the least expensive and most efficient option for your business – check it out.