Is outsourcing right for your company?

Though outsourcing of various business processes is a popular decision, increasingly widely adopted in the time of a slowing economy, still many companies claim unsatisfying experience with it. Most commonly named pitfalls are: 

• increased costs instead of the savings

• low quality of the performed works 

• broken deadlines and overall failure of service providers to deliver desired results.     

What is the issue and how to understand if outsourcing will work for your company? We at ReStaffy defined the following questions to be answered before an outsourcing project.

Do you have an exact understanding of all the components of the business process / task you would like to outsource?

Such understanding will first of all help you set the right requirements to your outsourcing partner. Just a few examples, when you are an entirely domestic business, your accounting outsourcing company doesn’t need any experience with overseas operations. However accounting documentation for exports and corresponding reporting will require a different skill set. 

Second, it will help avoid misunderstanding about the specific tasks and operations that will be handled by the service provider and thus save time on additional clarifications and negotiations. You will also be protected from the situations when you have to look for additional providers in the middle of the project and unforeseen costs. If we use the same accounting example you should be aware of what exactly you want to hand over: is it complete accounting, from collecting and storing primary documents to preparing and submitting accounting, tax and statistical reporting or outsourcing of just specific areas, such as payroll and HR administration, expense reports, fixed assets, inventory or bank and currency control. 

Do you have a dedicated contact person from the side of the service provider?

This person is responsible to inform you of any issues arising at the side of the outsourcing partner, as well as suggest solutions to them and coordinate the collaboration between the companies. In a word you will stay in control over the outsourced process and the results. For example, as a growing business you hire a digital marketing agency to run a search ads campaign to increase the number of incoming requests and your sales figures. Your contact person from the agency should inform you whether there are enough searches for the goods you are offering, what a prognosed cost of a request (lead) could be, whether it’s maybe worth to abandon the idea of search ads and to focus on promoting your goods on local and international marketplaces and what is required from your side for it.

Your contact person is someone to whom you can reach anytime to get a status update and clear vision on how the project is progressing. This person translates specific professional terms into commonly understood language. In our example with the digital marketing agency you will not have to google to understand what are CPA, CPL, LTV or ROMI. 

Have you agreed on the communication channel, regular synchronisation time slots and reporting format? 

This is a rather technical point, but fixing where and how often you will communicate with the outsourcing partner prior to the project start makes the work much more efficient and pleasant for both you and the service provider. With so many communication channels available it’s easy to miss something. You, like the outsourcing partner, do not want to lose time on comparing input data arrived via email, what’s up, skype, phone or any other messenger. 

Agreed reporting format guarantees that you always have information on the project status and business decisions and similarly protects the outsourcing partner from spending additional time on gathering new data or rearranging initial reports. Time for reporting preparation is always included into the fees of the outsourcing partner, so when a significant change is required you may either face an additional bill, or the service provider can try to compensate the losses by reducing efforts for the core outsourced tasks (lower quality). And regular synchronisation time slots make sure you don’t spend time (that you would dedicate to more important tasks) for scheduling a meeting or a call. 

Who in your company is authorised to confirm / approve works of the outsourcing partner and changes to them?

You may be a very democratic business where all decisions are taken jointly based on an open discussion and it is definitely wise to include your outsourcing partner into the same environment and decision-making process. You are delegating your non-core tasks and should benefit from the experience of the service provider whether it’s accounting, marketing, delivery, construction or software development. 

However to avoid misunderstanding there should be one single person from your side who is authorising the tasks that will be done by the service provider and who will be accepting the results. This translates into time savings on catching up and guarantees quicker reactions of the outsourcing partner.   

Conclusion

Independent of the size of your company to fully benefit from outsourcing you need working business-processes. They may not be fixed in paper or electronic form, but all your employees should know and follow them. You need to define the place of your outsourcing partner in the process and clearly communicate expectations before starting the project.