The debate as to whether accounting, data processing, human resources and other office support functions should be kept internal to the firm or outsourced has been going on for years.
Overseeing every aspect of an enterprise can be seen as vital to efficient control, however, it can interfere with the business’ core activity by expending resources on ancillary functions, functions that can be performed quicker and more efficiently by experienced professionals.
Here are seven reasons to outsource:
1. Concentrate on your Business’ Core Activities
With the increase in reporting requirements and governmental regulations, not to mention business expansion, back-office operations often expand as well. This expansion consumes resources (human and financial) at the expense of the core activities that brought success in the first place. Outsourcing those activities allows the entrepreneur to refocus on those business activities that are important without sacrificing quality or service in the back-office.
Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short period of time; Outsource purchasing.
2. Cost And Efficiency Savings
Complicated and time-consuming back-office functions cannot be performed by your current staff at a consistently reasonable cost. Overtime costs may increase and efficiency in other areas may go down. Outsourcing these tasks relieves over-stressed employees from handling unfamiliar operations and puts it in the hands of professionals.
Example: A medical office processing insurance claims. Outsource to a firm specializing in medical billing will relieve the office staff from this tedium and allow them to concentrate on patient relations and scheduling.
3. Reduced Overhead
Dedicating staff to a particular back-office function increases overhead. Outsourcing frees up staff and reduces overhead. Outsourcing need only be considered during especially busy periods when existing staff can be better utilized for core business activities. Support functions can be safely off-loaded to an outside firm reducing back-office expenses and increasing productivity.
Example: Growth brings a need for increased office space. The current location is very expensive and there is no room to expand. Outsource telemarketing or data entry to reduce the need for office space.
4. Operational Control
Business areas, where costs are running out of control, should be analyzed and considered as ripe for outsourcing. Departments running over-budget may have devolved into uncontrolled and poorly managed units. An outsourcing company can bring management and control to support, but vital functions while at the same time allowing you to cut costs.
Example: A Human Resources department with a small staff and a large budget exceeding their contribution to the company can be outsourced to manage the budget and have a focal point for management to exercise greater control.
5. Staffing Flexibility
Outsourcing allows operations with seasonal or cyclical demands to take advantage of additional resources when required. These resources are released when not needed without the concerns of layoffs and the associated costs.
Example: A mail-order firm is short-handed during busy holiday seasons. Outsourcing the call-center provides additional resources for a fixed period of time at a consistent cost.
6. Continuity & Risk Management
High employee turnover adds uncertainty and inconsistency to the operations. It affects employee morale and degrades core business operations. Outsourcing provides continuity to the company, reduces substandard levels of operation and instills confidence in the core employees.
Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.
7. Develop Internal Staff
A large project needs to be undertaken that requires skills that your staff does not possess. On-site project outsourcing temporarily brings skilled staff into your company. Your employees work alongside the temps, acquire the new skill set. When the project is over, the permanent staff can maintain the project and the temporary employees are no longer an expense.
Example: Your company needs to implement a new inventory control system. Your Information Technology staff are unable to write the system in a timely fashion. Outsourcing the project allows your staff to learn the skills needed to support the application.
Contact 1099BOOKKEEPERS at 646-580-1099 or email matis@1099bookkeepers.com to discuss your outsourcing needs.