At a recent luncheon a long-time acquaintance informed me, “I never outsource anything and I think that any business that does is either poorly managed or incompetent. We do everything ourselves.” My friend is a senior partner at one of the largest legal firms in Indianapolis, a competent after dinner speaker, a semi-competent softball player and an incompetent fisherman. And, on this particular subject, he’s completely off-base.
Every company in the USA outsources. I’d make a guess that 99.9% of businesses in the entire world outsources.
Now before you start writing rebuttals to my assertion and tell me your company is different, let me ask you: Do you generate your own electricity? Do you manufacture your own tools, pens, paper, computers and other office equipment? Do you ever use USPS, FedEx and UPS or do you have your own in-house delivery service? Get my point?
We don’t think of purchasing “everyday” items or using the expertise of “traditional” services –snail mail, computer support, etc. – as outsourcing…but that’s what it is. And since every company outsources something, why does this word sometime trigger emotions and contention? It’s not an entity. It’s not good or evil. Yet when we think of bringing in someone from “outside” to do things we have always done “inside” we tend to hesitate. It doesn’t feel right.
The decision to outsource should be based solely on whether it’s the right thing to do for the business. Keep in mind that outsourcing is not a cure-all nor is it a 4-letter word. It is not a universal shedding of management control, an automatic expense cutter, a must-have for bridging technology gaps, or the only way a company can stay current in their given field.
Outsourcing is simply another business option that should be entertained with the same discipline as any other business decision.
So why and when should you consider outsourcing?
1. “Out of the box” thinking is almost impossible to do by people “in the box.” New ventures, outdated business strategies, in-a-rut revenue streams, and cost management confusion are always a good time for fresh eyeballs.
2. A talented but green staff might develop quicker by bringing in temporary outside skills.
3. Lowering operational and labor costs is what drives many companies to outsource.
4. Expanding and gaining access to new market areas can often be achieved seamlessly and at far less costs.
5. Outsourcing of “cost centers” can allow management to focus on core business, additional revenues and overall growth.
6. Keeping up-to-date on technology and marketing opportunities is difficult, time consuming and expensive if done “in house.”
7. An outsourced firm relies on results driven contract retention…seniority has no bearing on tenure.
What should you be aware of before outsourcing?
1. Hidden or surprise costs are always a concern. This can usually be minimized by specific contractual language as to “exact” roles, responsibilities and expected results. Just as important is clear language as to what is “not” included.
2. A lack of management control is often expressed as a major concern. This is valid but I’ve often found that accountability and measurements are usually more defined and better monitored with an outside agency.
3. Different company cultures and language can sometimes make partnerships more “interesting” than need be.
4. Data security is a very real concern whether done internally or externally. Special care needs to be taken especially if access and passwords are involved.
5. An outsourced company represents your brand. Before signing any contract be sure to get references and, more importantly, talk to them.
Businesses – small/large, B2B/B2C – are in a constant state of flux and sooner or later you’ll find yourself in a scenario where outsourcing may be the logical step to take. If you make your decision based on sound business reasons instead of your feelings…you’ll make the right one.
Written by: Dan Robbins
Carey Road Marketing