Benefits & Pitfalls of Outsourcing
Why SMEs Should Outsource. The Benefits & Pitfalls.
Outsourcing business processes to external providers that specialise in this area can have a number of benefits.
Regardless of the particular process you might be looking to outsource, before deciding on a third-party to handle any of your businesses’ activities it is crucial that you understand the benefits and disadvantages outsourcing can have.
Firstly, let’s look at the advantages:
Expertise and efficiency
When outsourcing make sure you use someone who specialise in their field. They will be equipped with the appropriate tools and the way their businesses are set up will allow them to complete the task at hand more efficiently and to a higher standard.
Outsourcing a process will share the risk associated with it between you and the 3rd party. What’s more, as an expert, the 3rd party will be better placed to deal with and manage the risks.
In most cases, the overall cost of an activity will be cheaper when outsourced – due to numerous factors. Recruiting in-house can be avoided (also avoiding associated salary costs) and 3rd parties will be able to perform the processes at a lower cost, so even with them taking their cut you will still be saving money.
Freeing up time elsewhere
Any time you are not spending on an activity internally is freeing up time for you to concentrate on and strengthen your core business processes.
So, what are the downsides?
Whilst outsourcing will often reduce costs, it is important that you don’t get caught out by any hidden costs. This is part of the reason that it is so important you find a partner you can trust.
Sharing confidential data
Many processes will require sharing confidential company data in order to be outsourced. Again, finding a 3rd party that you know you can trust is absolutely crucial.
Aligning activities with business objectives
At times it can be difficult for a 3rd party to continuously ensure it is aligned with your business objectives. As an outsider, the outsourcing company might struggle to take these into account and focus solely on getting the particular process completed. Effective management of the outsourced company can avoid this.
So, it’s clear that outsourcing can have a number of benefits for your company. However, the potential downsides and ways of avoiding them must be remembered to ensure you enjoy a successful and financially beneficial relationship.
How can you avoid these pitfalls?
We talk about making sure you choose a company you can trust. By using our MUSHROOM AFFILIATES, you can have faith and knowledge of their performance, service and costings. We handpick our Business Partners, assuring they match the high values expected by Mushroom and lead by example.
Don’t forget, Mushroom can help with Bookkeeping Support, Accounting & Legal Support!