What is outsourcing?
Outsourcing is the process of sub-contracting functions to an external supplier.
It is a popular process amongst organisations seeking to relieve themselves of the administrative burden of performing certain tasks in-house, as well as to reduce operating costs.
Organisations conduct a review to determine what areas of an internal function no longer add value to the organisation and what can be outsourced to a consultancy or business service provider. This may result in all of the business process being outsourced or some non-core activities.
What can I outsource?
There are many options when considering outsourcing, and depending on the size of your organisation.
Typically SMEs outsource the following:
- HR Administration
- HR Documentation and Procedures
- Recruitment
- Payroll Services
- Training & Development
- IT Systems Management
- Accountancy Service
- Credit Control (Invoice Factoring)
- Marketing
- Design
The pros and the cons of outsourcing
Advantages
- Cost Savings
- Increased Efficiency
- Access to improved Information Systems
- Improved Metrics
- Access to expertise
- Increased flexibility and response
- Reduced Risks
- To free up internal resources to work more strategically
Disadvantages
- Data Migration can take time if data is not currently in a manageable format
- Ensure that a robust Service Level Agreement is in place
- Some providers tie you in for 5-10 year contracts
- Standardisation to the service providers documents instead of reflecting organisational identity.
Selecting an outsourced Service Partner
A number of actions and decisions should be made when selecting a suitable Outsourced Service Partner. The simple checklist below should assist you through this process:
- Ensure that outsourcing is compatible with your objectives
- Agree areas that you want to outsource
- Prepare a brief as to the services you require
- Contact 5-6 Service Providers and ask them to prepare proposals and arrange presentation
- Review Proposals against service levels, support provided, reputation and investment costs
- Choose provider and agree service levels.
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