Outsourcing is frequently seen as a tool only available to big corporations who can use it to improve their structure and work arrangements. For instance, by moving an entire call centre or IT department to another continent. Not cheap, not quick, and not easy.
But the fact is that most small (and even micro) businesses are already taking advantage of outsourcing.
How come?
Have you ever involved an accountant in your work? Have you ever spoken to a lawyer about your business? If yes, you did, too (provided the accountant or the lawyer were not on your business’ payroll).
What outsourcing actually means (for small businesses)
According to Cambridge Dictionary, outsourcing is “the process of paying to have part of a company's work done by another company” or “a situation in which a company employs another organization to do some of its work, rather than using its own employees to do it” (https://dictionary.cambridge.org/dictionary/english/outsourcing)
In other words, it is when you pay an outside person or company to do some work that your business needs, instead of having an employee do it.
And contrary to the commonly held belief, that outsourcing is for big companies, the counterintuitive fact is that for small and micro businesses, this is the natural default. You simply cannot have a specialist on your payroll for every function, as we also explained in our earlier blog post (https://broadstone.io/blog/why-break-down-your-tasks)
Is outsourcing similar to buying my products from someone else?
In a way, these are similar approaches. Both the products that you resell and the services you outsource can define your success.
This is why it is important to acknowledge the significance of both the suppliers of the products that you sell and the service providers you work with.
Services you're most likely outsourcing
- Finance & accounting: bookkeeper, accountant, tax adviser, and payroll expert; perhaps insurance and banking
- Legal support: for contracts, registrations, dispute advice via a local law firm or freelance solicitor
- IT & tech support — the person who set up your Wi-Fi, fixes your computers, or manages your website hosting, whether WordPress or something else.
- Marketing, and design: perhaps copywriting, probably a graphic designer, maybe a social media manager or an SEO agency, and some fulfilment partners related to, for example, printing price lists, store decorations, or customer loyalty cards.
- At the intersection of IT and marketing, you find a range of web & digital services.
- Cleaning & facilities: you might involve an office cleaning company, most likely an external waste collection solution, sometimes pest control or a biannual cleaning of the air conditioning system.
- Logistics & delivery, whenever you work with couriers.
The list can of course go on and on.
The main benefits small businesses see when outsourcing
- Costs: no salary, no desk, no space in the office; you pay only for what you need.
- Expertise on demand: access to specialists you couldn't afford full-time (or need, for that matter).
- Flexibility: scale up or down without hiring, complications, or redundancies.
And at the end of the day, outsourcing lets the owner concentrate on the core business.
Risks worth being aware of
- Quality control and confidentiality, as you're relying on someone outside your team.
- Dependency and lock-in.
- Compliance: you're still responsible even if someone else does the work.
In most cases all this of course comes with the ability of remedying the situation quicker as compared to letting go of a disappointing employee.
Think of outsourcing as an extension of your team, not simply as a purchased service
- Think of your outsourced providers as part of your extended business, not just as a one-time purchase.
- Good communication, clear briefs, and actionable feedback matter just as much as with employees.
- Review relationships periodically to see if they are still the right fit?
Where are you standing?
- What are the services you are currently obtaining from third parties?
- How many such partners do you have?
- Are there some fixed partners you turn to or do you search for someone each time?
- Have you replaced any such partners?
- Are there any tasks you handle in-house while you could do it with an outsider?
- How about the other way around?
