small business outsourcing

Outsourcing 101 for Small Business Owners

A small business owner will keep looking for ways to make the company more profitable. Reducing costs is one way of widening profit margins – spending less on operations while getting same amount of work done will help you make the most out of limited resources. Making your business processes more efficient will also keep you from losing money unnecessarily, as well as ensure that you’re getting value for your money

Outsourcing can get all of these things done. This kind of arrangement lets you transfer part or all of your operations to a trusted service provider with the human capital and technology needed to effectively carry out tasks.

Here’s what you need to know about outsourcing:

On service providers

There are as many service providers out there as there are small businesses. If you’re wondering where to begin, you can always scour your professional network for referrals. Ask a business contact for a recommendation if they’ve outsourced successfully in the past. Online searches will also give you an idea of who’s offering the services you need and where they’re based.

Your options range from large, established service providers that have the capacity for a wide range of services, to smaller, lesser known ones that have fewer but highly specialized offerings. Make sure to check their credibility and see if they have a strong portfolio.

It also matters that the service provider you hire have as few internal issues as possible. A high attrition rate can point to business continuity problems, while financial trouble could mean that the service provider can fold at any time and leave you hanging.

Be aware of dubious practices as well – some service providers will claim to have an international presence just because they list office addresses in multiple countries on their website – making it seem like they’re in the big time when they’re not.

On-shore versus Offshore Outsourcing

On-shore outsourcing lets you transfer processes to a service provider based in the same city, state, or country as your business. Offshoring, on the other hand, refers to entrusting your business functions to a service provider in a remote location, like the Philippines.

Choosing between the two depends on your comfort level with offshoring, how much you’re willing to spend, and if you can manage to fly out regularly for on-site visits to the offshore team.

On-shore service providers will cost you more. They charge higher rates and use the same value currency as you. Offshore service providers charge lower rates, plus the currency they use is likely weaker than yours, giving you more purchasing power.

Scaling down or up

Small business outsourcing is a flexible arrangement that allows you to scale operations up or down as your business requirements change. If you want to be more cautious, you may outsource a small portion of your business operations, then gradually outsource more functions as you become more confident with the service provider’s capabilities.

If you’re going through the motions of business peaks and valleys, you can avail certain services only when you need them. This lightens the work load of your in-house staff, who might have difficulty coping during peak season. You may end the contract once the work load reverts back to normal.

When done right, outsourcing can be highly beneficial for your small business. So take the leap and talk to a service provider today.

Posted in Outsourcing, Small Business Outsourcing.

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