Benefits of Outsourcing for Small Businesses

We’re shifting gears from last week’s discussion (How to Outsource) to show small business owners what the benefits of outsourcing are. While you might think that only “the big guys” — large, multinational corporations — can benefit from outsourcing, small businesses can potentially realize even bigger outsourcing benefits because of how many new jobs are actually being created within smaller companies. According to the Small Business Administration, companies with less than 500 employees account for almost 65 percent of new private sector employment. In many cases, a large percentage of the new jobs created by small businesses are viable candidates for outsourcing.

Do you know why your business should consider outsourcing? One of the best ways to look at this involves asking what’s in it for your company — the benefits and advantages of outsourcing.

Universal Benefits of Outsourcing

For most organizations, there are eight “universal benefits of outsourcing” — regardless of your business focus, you should expect to realize these significant benefits:

1. Infrastructure Flexibility — Without any infrastructure investments, your organization can add an unlimited workforce.
2. Business Continuity — When you add outsourcing capabilities in another part of the world, your company will minimize continuity risks due to natural disasters and political events.
3. Focusing on Core Areas — A smart business strategy enabled by outsourcing is for company employees to focus on core strengths and to outsource non-core functions.
4. Business Expansion Choices Are Expanded —Even the smallest company can venture more easily into new markets and business opportunities because of reduced costs enabled by outsourcing.
5. Staffing Flexibility — Businesses no longer need to hire and fire due to the ups and downs of fluctuating business cycles.
6. Risk Management Improvements — Risks due to data losses are shared with or transferred to outsourcing partners with established risk management practices.
7. Reduced Technology Expenditures — One of the biggest cost savings due to outsourcing is created by eliminating expensive technology and software upgrades.
8. Offering 24/7 Service to Customers — In a 24/7 world, your customers often want everything “now” or “tomorrow at the latest.” Outsourcing allows you to say “Yes” to your clients’ most urgent demands.

Outsourcing Advantages for Specific Business Functions

While the eight outsourcing benefits described above might be enough to get your attention, there can be even more benefits from outsourcing within specific business functions — for example, operations, human resources, customer service, marketing and sales.

Operations — First, business owners realize increased efficiency due to a talented workforce capable of higher output. Second, small businesses will obtain access to specialized skills that might not even be available locally. Third, all business services can be delivered faster and with higher quality.

Human Resources — HR functions are becoming even more critical within small and big businesses everywhere. With appropriate outsourcing, small businesses can quickly improve recruiting and new workforce screening.

Customer Service — Customers will almost always be delighted to find your customer service lines open on a 24/7 schedule. Only your competitors will be disappointed to see that your company now also offers multi-lingual customer support.

Marketing — In most small businesses, there is a lengthy list of marketing activities that can be effectively outsourced with a resulting savings of both time and money. Examples include web design, content writing and brochure design/publishing.

Sales — Pre-sales activities can be shifted to outsourcing partners. This allows company employees to shift their primary focus to closing sales.

Hidden Outsourcing Advantages

In addition to evaluating the “obvious advantages” of outsourcing, small business owners should not overlook three important but often hidden business advantages:

• Adding to Your Competitive Edge — In your best efforts to beat the competition, few business strategies can work as well as outsourcing when it comes to putting some serious distance between your company and “the other guys.”
• Using Time Zone Differences to Your Advantage — One of the smartest (but hidden) reasons to use outsourcing companies “on the other side of the world” is to leverage differences between time zones. You can literally provide “overnight service” on key projects when your outsourcing provider completes work while you and your employees are sleeping.
• Using Money Saved to Fund Other Projects — When you save money by outsourcing, your most difficult decision might be where to use the savings. For example, you can use the funds for business expansion or to reduce pricing and improve customer loyalty.

The Next Outsourcing Step

Selecting the right offshore company might be your most important step in an outsourcing decision process. The benefits of outsourcing can be substantial for small business owners — if you find the right partner in the right location.

– BackOfficePro