20 Dec 2013

Does Outsourcing Minimize or Increase Risk to Your Operation?

The process of sending vital business services to an outside company seems like it carries an immense amount of risk. After all, you’re giving up direct control over that process. You’re handing one of your core functions over to someone who’s not part of your company. It sounds risky. Is that true, though? Actually, when done properly (and note that word, properly), it actually decreases the risk to your company. How’s that?

More Reliable and Dedicated to Meeting Obligations

Here’s the thing. Outsourcing service providers are only as successful as their reliability. If a company cannot be relied upon to provide the service they were hired to perform, and to perform that service well, word gets around. Pretty soon, the company is out of business because no one will hire them. It’s really as simple as that. So, outsourcing service providers have to be oriented to upholding their obligations and providing outstanding customer service each and every time. For you, that means less risk. Your in-house employees have no such incentive. If they fall down on the job, they get a warning and got back to their desk. Outsource service providers lose a contract, income and take a nasty knock to their reputation.

True Experts, Not Just “Workers”

When you hire employees, you do your best to ensure that those you bring aboard your company have a modicum of skills and experience. However, you generally have to settle, because most small and medium sized businesses can’t afford the salary that a true expert commands. With an outsource service provider, you can. You get the most experienced, skilled experts in the industry, and you get them for a rate less than what you’d likely pay an hourly employee, particularly if you calculate in all the additional costs that go along with hiring someone. That means you get true expertise applied to your task, which is good news for you, and reduces your risk.

When Risk Rises with Outsourcing

Ok, now let’s address the point hinted at in the beginning. There is one way that you can increase your risk through outsourcing. If you hire a fly-by-night company, you’re increasing your risk dramatically. There are excellent outsource firms all around the world, but there are also operations that should be avoided at all costs. Often, the only way to tell the difference between the two is to do your research. You need to dig into the company’s reputation, find out what previous clients are saying about their experience and see what their retention rate is for clients. If you see a very high bounce rate (clients using them once and then leaving like they’ve been burned), it’s a bad sign.

Outsourcing can reduce your risk considerably in a number of ways. However, it’s up to you to ensure that you choose a reputable service provider, or you increase your risks. With that being said, outsourcing is an ideal solution for improving business performance, cutting costs and building better profitability.

– BackOffice Pro

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