Outsourcing - is it good or bad for your business?

I was having a conversation about outsourcing earlier today, so thought I’d revisit the topic.  I’ve mentioned it before, in relation to the problems that NatWest Bank experienced a while back, which some (predictable) elements of the media blamed on the outsourcing of some IT functions to India.

This actually brings up the first issue – outsourcing means different things to different people.  If you say you are outsourcing business functions, then one person may assume you are working with overseas resources, whereas another might think that you are using a freelance PA just down the road.  Of course, both could be right, but for the average small or micro business the local route is the more probable.

I went for a quick Google just now to see what people are seeing as the advantages and disadvantages of outsourcing, and the results of the handful of webpages I looked at were quite consistent.

The advantages mentioned include the ability to concentrate on your core business, as opposed to administrative or clerical functions.  That’s the big one, really – you went into business to make and sell your widgets, and not to spend your time wrestling with IT or the VAT Return.

Another key benefit is the fact that outsourcing functions allows you to align your outgoings with your revenue, so it can be brilliant for the all-important cashflow.  Many business kind of do this anyway, by bringing in temporary Summer or Christmas staff, so it’s a logical extension of that, really.

You have another advantage in terms of the speed and quality of delivery.  People coming into the business to provide a service ought to have full focus on the work – they are not subject to the everyday distractions of the everyday members of staff, and in theory they are also experts at what they do.  This is not to say that you can’t employ experts, but we all know that a significant percentage of an employee’s time is spent on fire-fighting and non-core distractions.  That’s just a fact of business and office life – something always kicks off when you really don’t need it.

You’d think that all of these ‘advantages’ would give you better control over your business, wouldn’t you?  Can you see yourself with all that time freed up to work on your business development, and on strategic management and growth?  How can you lose, with all the tedious non-core stuff being dealt with for you by your outsourcing partners?  You couldn’t have a more flexible business model, really, and you should be proud of yourself.

It’s interesting, therefore, that almost all of the disadvantages people see in outsourcing boil down to one thing – a loss of control.

Of course, there are going to be failures – you can suffer problems with quality, delivery and reliability with outsourced partners in exactly the same way as you can with employees.  (But you do have one ace up your sleeve – you don’t have to pay them no matter what!)  The over-riding concern, though, is loss of control over your own business processes, or an inability to service your customers in your own way.

Doesn’t that rather imply that the biggest barrier to outsourcing is ourselves?  We just don’t really trust anyone else with our valuable business activities, so we are very nervous of letting go.  Yet how many times do we read that the most effective businesses are those where the leaders have learned to delegate, and to let go a bit?

It’s all about finding the right partners, and building those business relationships to carry you forward to growth and prosperity.  There’s no better time to start that process than right now …

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