3 Benefits to Outsourcing, if Done Correctly
Many people when they hear the word “outsourcing” they immediately think of jobs elimination, deep cost-cutting and subpar customer service. But the facts are that if done right, outsourcing certain functions should create more opportunities and help grow a company.
While organizations outsource certain roles for different reasons, the one common denominator is usually cost savings. Many times this means the elimination of certain functions within an organization, thereby putting employees affiliated with those areas at risk. As unfortunate as that may be, if done correctly and with the right partner, the outsourcing of certain administrative areas—such as accounting, client services and IT—can be a key growth element to an organization and create more opportunity.
Outsourcing should never just be about cost savings or doing something cheaper. That is called managing on the decline. Instead, it should be part of a greater organizational structural plan. There are three main benefits every organization should realize when making the decision to outsource anything:
- Create more capacity: Outsourcing certain job functions should create more capacity as the company grows. It should allow the organization to scale more easily without being burdened with reinventing processes and procedures and requiring employees to constantly take on more. This can be incredibly beneficial in high-growth companies or those on an acquisition spree. Keeping up with the administrative support needs of a fast-growing company can be daunting and outsourcing some of the functions should result in more scalability and better internal support.
- Allow for the focus on core capabilities: During growth cycles, a lot of time is wasting on trying to keep up with the basics of running the business. As a result, many companies lose sight of their core competencies. Outsourcing should free talented employees and managers—from the C-level to rank and file— to focus on what their business does best. It should allow them to focus back on core competencies and grow the company, instead of being bogged down with internal processes.
- Generate savings to reinvest in the company: The main reason organizations outsource any area is to save money. In theory, outsourcing is supposed to create efficiencies. However, what is the organization doing with that savings? Smart companies use outsourcing as part of a grander plan to reinvest in areas for growth and create job opportunities.
Outsourcing is a dirty word to many because they have been victims of company downsizing. However, it doesn’t have to be, if done for the right reasons. It needs to be part of the overall strategy to create more capacity, focus on core competencies and generate savings that are, in turn, reinvested in growth and jobs.