Outsourcing can be a great way to save money for your small businesses, whether you require an individual with specific skills or just somebody to help with the extra workload. Before committing to any business decision, research needs to be carried out to find the best possible option. Outsourcing in its basic terms is the product or service from outside the business, and it’s becoming increasingly popular because it increases productivity and is cost effective.
Here are some of the pros and cons of outsourcing for your small business. You will need to consider if the positives outweigh the negatives before making any decisions.
Benefits of outsourcing
The main benefit of outsourcing for your small business is the low costs. If you are outsourcing globally, then you will likely get reduced labour costs. For example, you are more likely to get a low cost from a worker abroad from a developing country than you are here in the UK. Outsourcing also allows business owners to get certain tasks completed without having to invest money in long term employment.
You can avoid hiring employees when you decide to outsource. This can save you both time and money. Costs of recruiting staff can be huge, therefore outsourcing will be beneficial in terms of saving money as well as valuable time of the business owner. There are multiple ways in which you can save money by outsourcing and consequently avoiding recruiting, and they are: not giving paid holiday, recruitment costs, training costs, and any other benefits offered to employees.
Huge talent pool
The great thing about outsourcing is that you have an access to a pool of extremely talented people who are great what they do. When you need a specific task completing, then finding a specialist will give you a better result. For example, if you need a video for a new marketing campaign and you simply don’t have the talent or the equipment to do it in-house, then outsourcing is the best option.
Improved efficiency and productivity
When you hire employees, you are likely going to give them scheduled hours in the office or on the shop floor etc. However, when it comes to outsourcing you are paying the individual for their work, no matter what time they spend on it. For example, whether the task takes two days or ten, once you have agreed a price then you won’t have to deal with unproductive staff who lack efficiency.
Ease of pressure
Outsourcing can ease the pressure on your team, especially if they are carrying out extra tasks and still focusing on their duties. Whether it’s expansion or another reason for a heavier workload, it can pressure your staff. Therefore, outsourcing can make sure that you staff are able to effectively carry out their jobs without stress from extra workload. If you are a sole business owner, then outsourcing can help you focus on the bigger picture of your business instead of carrying out menial time consuming tasks.
Disadvantages of outsourcing
When you have employees they are most likely working directly under your watchful eye, therefore you have all the control when it comes to what work gets done. If you are a micro manager or are sometimes deemed a control freak then you may struggle with outsourcing. Outsourcing means trusting somebody else to effectively carry out a task, and you may struggle to give up that control that you would normally have over your employees.
When it comes to outsourcing you will need to find a balance between the price you are prepared to offer for the optimum quality of work. You don’t want to compromise with quality as this can affect the results you wanted to achieve by outsourcing. Make sure you take time and carry out your due diligence when it comes to working for certain individual and companies.
When you are outsourcing globally, it can be difficult to communicate. You will need to keep time zones in mind as they will effect communication and potentially other work. It’s a good idea to agree times and the methods of communication suited to all parties from the outset to ensure successful communication.
The main attraction of outsourcing internationally is usually the low labour costs compared to the UK. You will therefore need to make sure that all costs and fees are understood before entering a contract, and make it clear that all costs and fees need to be transparent throughout your working relationship. If you do not there may hidden costs that you end up having to pay, taking away the main benefit of using low cost labour.
There are both plenty of pros and cons of outsourcing for your small business, and it’s advisable to take time to consider the options. Weigh the benefits over disadvantages to see whether outsourcing is for you and your business.