So your business is flourishing, and you’re taking on an increasing workload; the question is, how do you maintain this steady growth without compromising its core values and quality of service? There comes a time in every business’s life cycle when the issue of staff constraints begins to raise its head, and the question of outsourcing becomes a serious consideration.
Firstly, why do businesses outsource? One of the main reasons is simply time – or lack of it. Small businesses, ones that are growing quickly and juggling lots of plates, simply cannot afford to have key members of staff overstretched to the point of ineffectiveness. Outsourcing offers a spare pair of hands to help manage busy periods, bringing in specific skills on a temporary basis, to help support the company and maintain the success it has built from the launch onwards. Using expert outsourcing organisations essentially frees up your staff to concentrate on the core of the business and to concentrate on developing their own skills.
Outsourcing can provide further multiple benefits. It can also help control capital costs by reducing overall spend on staff; hiring a full time specialist is much more expensive than using a freelancer to do the same job, who can be hired on and off dependent on the needs of the business.
Outsourcing also allows companies to turn on new projects quickly, reacting to market demands and fulfilling customers needs much more effectively. Customers can often request work that the core business might not be able to provide – outsourcing can help to meet this demand and draw in new revenue streams, which might not have been part of the existing model in the first place.
Further benefits which are important for all businesses, not just those at the early stage of their lifespan, are the expertise that outsourcing tasks can bring, and the risks it can mitigate respectively. Utilising external specialists can help breathe fresh life into a venture and offer a different perspective to a particular challenge, which can be vital when maintaining growth in a small business. In terms of mitigating risk, take hosting or working in the cloud for example; if you’re a small business utilising sensitive data, it can be much more effective to use an expert cloud hosting provider to look after it. Not only will they have the skills to do this effectively, they will also be much more aware of regional regulations and legal requirements, which in turn reduces the legal risk that could threaten your company in the case of a data breach.
Pitfalls of outsourcing
So now that we’ve covered some of the benefits of outsourcing, what are some of the pitfalls that can be encountered when working with external partners at this stage in the business?
One of the first points I would raise is the loss of control to an extent. When outsourcing to a partner, you are placing a huge amount of trust in the ability of their team to deliver on your brief. If the brief is poor, misunderstood, or the team working on it are not the strongest, then you run the risk of results being delivered that are not up to par. And in many cases you will still have to pay for these. This can be hugely damaging, especially in the early stages of a business when budgets are tight.
The second are hidden costs. When outsourcing, especially to service providers, there will be a limit to the amount of work that you are paying for, and so anything extra that arises will often be subject to further outlays. Being at arm’s reach with your external partner can often mean costs are not necessarily transparent when you first begin working together.
And finally, confidentiality can be an issue. No matter how much you trust an external partner, if you share data with them then essentially you are increasing your risk by relying on their security systems. In most cases this is never an issue, but as soon you share your data with another organisation the likelihood of a breach increases as it’s now in a location that is not under your immediate control.
While outsourcing can offer risks, for most businesses in early development stages it is a vital ingredient to success. Every business needs support at certain times in its life cycle, and so choosing the right partner can be the difference between triumph and failure.
Richard Healy is the co-founder of BaseKit.