Are you an SME business owner? Here are 5 things you need to ask yourself before you outsource

Nov 6, 2015SHORE Blog

Fact: Small and Medium Enterprises (SMEs) that wish to compete against more established organisations need to overcome numerous business challenges. These could be limited capital, little brand recognition, lack of established operational structure, few experienced employees, an absence of a distribution network, credit or relationship with suppliers, or even office space.

Daunting as it may seem, many business owners today are realising that in order to scale their business, they need to free up some time and money, as well as human resources in order to focus on their area of expertise and bigger priorities. And this could be done through outsourcing.

Outsourcing is no longer reserved for large organisations looking to offshore large-scale operations. Nowadays, even five-person companies are gaining a competitive advantage by outsourcing their lower-level, more repetitive tasks or even the more client-facing activities like marketing and account management. Essentially, outsourcing will enable business owners to develop a strategic extension to their existing operations with more focus on growth opportunities and decision-making.

Before deciding to outsource, there are a few essential questions you must ask yourself in order to maximise performance, and ultimately achieve productivity gains, cost savings and quality improvements.

  1. Why?
    Outsourcing allows you to focus on what you do best. It also enables you to cut operational costs and save precious time. But why exactly do you want to outsource? Immediate cost-cutting and time-cutting are merely short-sighted goals. Instead, you should look at outsourcing as a way to free up your employees to take on bigger tasks, which will help your company grow. This is also a great exercise to better understand the activities to outsource and develop your company success criteria.
  2. What?
    You can outsource just about anything, including IT, customer service, bookkeeping and accounting, SEO, marketing, etc. But before selecting a service provider or any suitable outsourcing engagement model, it is essential to identify what you want to outsource based on your company’s needs. Needs assessment involves feedback exchange between representatives of all the operating areas of your company that will be affected. This process is crucial in determining what expertise and qualifications are necessary to perform the functions that are to be outsourced, as well as figuring out which kind of delivery model and vendor experience are appropriate in meeting the company’s needs. This is a critical exercise to fully understand your criteria for success as well as failure.
  3. Where?
    Deciding where you want to outsource can have a direct impact on the quality and speed of work done. For this reason, many small businesses opt to hire outside contractors or consultants in nearby destinations, such as the Philippines, which is just three hours ahead of Australia time. The minimal time difference means it would be faster to get your ideas converted into products or services. The Philippines is also rich in highly skilled human resources—talent that you otherwise may not be able to find locally. And more importantly, Philippine wages and benefits are much lower, meaning services can be produced at a significantly lower cost.
  4. When?
    Before handing over work to a service provider or deciding to move some parts of your operations offshore, find out the potential vendor’s architecture, development tools, methodologies, databases, etc., including implementation process and timetable, checkpoints, change of control handoff and lifecycle expectations. Test the process by producing work based on it. This will give you an idea of how effective it is and will help you set realistic expectations. Once your service-level expectations and specifications are in place, then you are ready to outsource.

  5. What next?
    Whether it’s your first time to outsource or you are looking for that next push in your existing offshore operations, a company health check is required on a regular basis. A health check allows you to validate, track and monitor the output of your offshore operations. Consider the following criteria:
    • Process: Have you designed a solid plan and steps to define the desired outcome or simply put in place a guide for people to work with?
    • People: What are the key skillsets and performance indicators that will allow you to set the right expectations and monitor progression to improve where needed?
    • Strategy: Have you developed a clear view of the near and future operational goals to project growth, efficiently deal with issues and risks and create strong alignment with your outsourcing partner?

While there are more drivers of success, the people, processes and strategy will trigger an ongoing exercise to ensure a strong, validated learning to continue to build a successful outsourcing operation.

At SHORE Solutions, we deliver strategic value by allowing our clients to leverage our flexible, innovative delivery models and operations, backed by our solid suite of shared support services, including facilities management, recruitment, HR, operations and IT support.

Explore our customisable outsourcing models to grow your business: