Outsourcing: the pros and cons

It’s a problem that affects both starting and experienced entrepreneurs: too much work, not enough staff. Outsourcing can provide a solution, but you should know what you’re getting into.

What is outsourcing?

In outsourcing, business processes are entrusted to a third party. This can be done on-site or off-site, temporarily or structurally, in Belgium or abroad. It’s up to you to decide which tasks you entrust to a third party, whether in whole or in part.

The following are the most commonly outsourced processes:

• payroll and personnel administration 
• accountancy
• logistics/distribution
• sales
• marketing
• customer service
• IT

Outsourcing is not black and white.  Even though outsourcing business processes can be a blessing for your workload, it can also create additional expenses.

The main pros and cons

4 pros

1. Continuity: the quality of your business processes is guaranteed at all times. If one of your workers is ill for a long time or leaves your company, this has no effect on daily operations.

2. Focus on core tasks: by outsourcing tasks that are repetitive or with little added value, you have more time to focus on the development of your company.

3. Financial transparency: outsourcing means you don’t need to recruit, train and remunerate the staff yourself. In addition, you save on office space, hardware, etc. Every month, you will receive an invoice stating the exact costs beforehand.

4. Expertise: outsourcing partners have the latest knowledge and skills, because they focus on specific processes. This can stimulate innovation in your company.

4 cons:

1. Loss of control: if you outsource, you have little control over the ‘how’ or ‘who’; you only have control over the ‘what’.

2. Cost: outsourcing processes is not always cheaper than doing the work in house. A top quality partner often charges high rates.

3. Long-term contracts: outsourcing must fit within a long-term project.

4. No accumulation of knowledge: outsourcing business processes drains the knowledge out of your company. It is difficult to reverse the trend later on.

Which processes should you outsource?

Carefully select the tasks you want to outsource. These 3 tips can help:

1. Decide which tasks are company-specific and deliver added value for your stakeholders. If you have sufficient resources and time to complete them properly, keep them.

2. Ask your employees which tasks they like to perform. Satisfaction in the workplace is an important element of outsourcing. You should outsource tasks that you would rather not do yourself.

3. In the same logic, it makes more sense to entrust time-consuming, technical processes to an external provider than to outsource brief tasks.

How do you pick an outsourcing partner?

You need to be critical when looking for a partner. Ask your fellow entrepreneurs for advice and always compare several suppliers (in terms of supply, approach, price, etc.). If you need more convincing, start by entrusting your outsourcing partner with a small task. When you are satisfied with the outcome, expand the scope of processes you outsource.

Conclusion

Outsourcing business processes to external experts is only worthwhile if it fits within your organisation’s long-term plans. If that is the case, select a reliable partner and set clear objectives.