Strategies in Applying Outsourcing for Small Business

Most of the time, people think of outsourcing in terms of large corporations sending out projects and office functions to contracting companies – most of which are based in foreign countries. It is true that outsourcing first came into worldwide prominence when large companies began to look for ways to save on overheads and labor costs, and a great deal of work sent out found its way to developing countries. Today, however, outsourcing for small business has is becoming more and more common. Small and medium business enterprises are certainly beginning to see that the practice of outsourcing can be adapted to smaller companies.

1. Defining the core of the business.

Outsourcing for small business starts with defining the core of your business. Small businesses must keep their control over areas that are the very essence of the mission of the enterprise. Once these areas are well defined, areas that are not as strategic can then be considered for outsourcing. For example, a travel agency with a strong guided tours component needs to maintain its own tourist guides but perhaps it can outsource accounting, or even phone in inquiries, which would require the business to buy 1300 numbers since such numbers actually encourage customers to pick up their phones and dial. A furniture company that is built around custom-made couches needs establish control over the production of its couches, but it is also possible to outsource the making of some parts that are not essential to custom designing.

Small businesses can review what parts or areas of operations do not have to be done by in house staff. This review has to be done with openness to change and a willingness to do research so that outdated assumptions can be debunked. For example, it is not true that a sales outfit needs to have all of its bookkeeping done “at home”. Neither is it true that all IT needs must be met in house.

2. Exercise caution.

No two companies are the same, and because of this, outsourcing will work differently for each company. The usefulness of outsourcing will depend on many factors: the quality of the provider, the kind of business the hiring company is engaged in, and the external environment of the business. Given these realities, it is best for small businesses not to commit to long-term contracts. If you have a small or medium enterprise, and you want to outsource some aspects of operations, test the waters first before going in for one or two year periods. Commit only to a short-term initial contract, and then provide venues for assessment and renewal – if that is what you will want then.

3. Begin with a few functions.

Over the years, people have seen that there are some business functions that can be outsourced with good results. Some of these functions are the following:

•    Expertise in specific fields. Every now and then (perhaps seasonally) most establishments find that they have need for experts in some aspects of production. This could be a graphic artist or a writer. There is no need to develop an in house expert for work that is not done regularly.

•    Public relations. For most small businesses, hiring full-time PROs is neither practical nor necessary. Usually, small companies experience great need for a media consultant when a new product is launched or when a special occasion comes up. This is the kind of function that can be successfully outsourced to a reputable PR company.

3.   Know the basics of outsourcing.

If you are the owner of a small or medium sized company, and you are thinking of outsourcing, find out if outsourcing is right for you. Consider all costs both for and against outsourcing. Look at the organizational culture of your company and the contracting company to check for compatibility. Take a long hard look at what you would consider a successful business and create indicators that concretize your concept of success. Once you have all your questions answered, you can take the first steps in applying outsourcing for small business.

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Bambie Navarro

About Bambie Navarro

There are three things I enjoy most - reading, writing, and a good cup of coffee. My passion in reading has spawned my interest in writing, and through my writing, I wish to share, teach, and connect.