- December 15, 2020
- Posted by: FLORES
- Categories: Accounting, COVID-19 Q&A, Human Resources
Outsourcing your critical business processes became a popular business strategy back in the late 80’s and early 90’s to combat rising labor costs and an increasingly global marketplace. However, given the many benefits of outsourcing, it is obvious that today all businesses can seize the opportunities of using outsourced providers.
Necessity over Strategy
In many cases, the benefits of outsourcing services are not an optimization strategy – they’re a necessity. Often the only feasible way to grow your business, launch a product, or manage operations is to delegate certain tasks to an outside vendor.
Top Reasons to Consider Outsourcing
- Allows you to Focus on Your Core Business Process
It’s more efficient to spend your time doing whatever you’re good at. If you’re a marketing agency, you should be marketing your clients. If you’re a consultant, you should be coaching. If you are a restauranteur, you should be creating a menu and service venue guests want to dine at again and again. Every minute you work on tasks outside of your skillset is time spent inefficiently. It’s almost always more cost-effective to outsource everything but your core business processes. You’ll save money, avoid stress, and spend your energy working on things you enjoy.
- Reduced Labor Costs and Overhead Expenses
Hiring and training staff is expensive, especially for short projects, and temporary employees rarely produce the high-quality work you need.
When you outsource, you convert fixed labor costs into variable costs, meaning you only pay for the services you consume. This eliminates the heavy expense of in-house employees and their labor burden costs. You also reduce facility expenses by not needing more office space, office supplies, and other employee burden expenses.
- Control Cash Flow
When you outsource, you convert a fixed cost (a full-time salary) into a variable cost (a pay-what-you-need service). This frees up your cash flow for investment in other parts of your business. You could funnel that cash into improving your facilities or running marketing programs. A company that isn’t saddled by cumbersome fixed costs is flexible and quick to adapt to new ideas or market conditions.
Furthermore, outsourcing services free you from having to invest in technology or custom infrastructure. For instance, by working with an outsourced accounting firm, you wouldn’t need to purchase your own ERP or back-office software. Those are the outsourcer’s problems. Not having to make these investments makes it much easier for a small business to compete.
- Access to new Resources
Outsourcers come with specialist knowledge, expertise, and experience you couldn’t afford to hire on your own. The outsourcer is responsible for any licenses or accreditation that the work requires. By focusing on their specialty, outsources stay abreast of industry changes and trends, learn new techniques, and constantly develop their skills.
Furthermore, outsourcers have access to skills and tools you may not need today but will someday. If they don’t have someone on staff who can solve your problem, they likely have a network of specialists with complementary skills they can pull from. You don’t have that sort of flexibility with in-house employees.
- Managed Risk
Employee turnover is painful. When someone quits, all that money you spent on hiring and training walk out the door with them. Turnover at the wrong time (and is there ever a right time?) can disrupt your operations, causing costly problems.
Outsourcing builds a level of consistency in your business. If your human resources manager leaves the company at a critical time, you would have to scramble to fill the position (possibly hiring the first acceptable applicant, even if they weren’t great), do the work yourself, or simply go without.
But if you outsourced that function, your operations would continue smoothly without interruption or risk. You could rely on the tasks to be completed and the costs to remain static.
If you would like to learn more about the benefits of outsourcing give FLORES a call today. We are the industry leader in back-office solutions of accounting, payroll, HR, and consulting services and welcome the opportunity to speak with you to see if our outsourced solution is the best fit for your company.