The What and Why of Outsourcing

Understand the meaning of outsourcing and learn how it will help your business.

What Is Outsourcing?

Outsourcing means transferring some portion of your business’s work to an outside service provider instead of doing it internally. When done right, outsourcing is a valuable cost-saving measure that makes your company more efficient.

Outsourcing includes things like:

  • A company outsourcing its human resource and bookkeeping to an accounting firm because they lack this expertise
  • A solo entrepreneur hiring a web designer to set up their website
  • A small business hiring a virtual assistant to manage online tasks such as social media, marketing management, blogging and administrative support

Many aspects of a business can be outsourced, from very small daily routine tasks to massive undertakings. Some things that are commonly outsourced include:

Data Entry. Companies often hire outside help to do data entry, transcription or other tasks that mainly involve typing. These are tasks that are particularly easy to outsource.

Routine SEO Work. Small SEO tasks can be outsourced like social media, forum posting, blog commenting and backlink building.

Creative Work. Creative work and content creation, which includes designing images, web design, content writing, logo design, and so on, are often outsourced to specialists with the right skills.

Bookkeeping. Daily, monthly, and yearly bookkeeping is often outsourced to accounting firms or an individual freelance bookkeeper.

Customer Service. Some companies outsource customer service tasks, although later in the course we’ll discuss potential problems with this.

Research and Development. When there is a subject outside of a business’s expertise, it will hire an outside research and development firm to conduct this research or provide this information.

In recent years, with the rise of small home-based businesses with limited employees that conduct much of their business online, there has been a rise in outsourcing as well. It’s common for these small businesses to hire outside help for the many online tasks they must do.

Ongoing vs. Per-Project

A business can outsource on a per-project or ongoing basis. For example, if the solo entrepreneur we mentioned before is hiring a web designer for a one-time project, he may not need her help again. Once the site is finished, there might be some maintenance involved, but the design part is done.
When you hire someone on an ongoing basis, it’s like having staff that’s not physically present. They might be “virtual assistants,” or contractors who you do business with you over the internet. Many companies prefer to hire assistants for ongoing work rather than per-project because it takes time to select, hire and train people. Plus, there are inherent risks whenever you work with a new contractor. Keeping a resource list of outsourcers, you already know means you don’t have to take these risks.

The Benefits of Outsourcing for Small Businesses

Outsourcing is especially beneficial for small businesses and entrepreneurs for several reasons.

Cost reduction

The main reason is that if done well, it reduces costs. It’s cheaper to hire and use people only when you need them and only for specific tasks. When you hire full-time employees, it means additional costs like insurance and benefits.

Space reduction

When you have a virtual workforce, you don’t need a large office. Outsourcing enables solo entrepreneurs to run businesses out of their bedrooms. They don’t need the space for employees and their work stations. This cuts down costs considerably on not only space but gear and equipment, since most outsourcers have their own hardware and software.

Workload reduction

Outsourcing can help your small business scale and grow. When you start getting more work than you and your small staff can handle, you can hire help from outside. This provides a good solution for when your in-house staff can’t handle the workload. You don’t have to turn away work or business.

Focus on more important tasks

When you outsource, you can get rid of routine, mundane tasks that don’t require any special creativity or expertise on your part. You can then focus on the more important and essential aspects of your business. For example, a small company may hire an outsourcer to post its social media content for them. Then, the company has the free time to focus on improving its overall social media strategy, rather than its day-to-day operation.

Make up for weaknesses

You can use outsourcing to make up for weaknesses in your skills and expertise. This is one of the main reasons companies hire people from outside. A company doesn’t need to do everything in-house. When a small business hires an accountant to balance its books, a manufacturer to make its products, or a programmer to turn an idea into an app, it’s using the skill and expertise of others.

Ease of communication

Finally, outsourcing has never been easier. The internet puts you in touch with your entire workforce.

Some small businesses swear by outsourcing, saying it’s solely responsible for their company’s growth and success. With all those benefits waiting for you, it’s time to dive and start outsourcing yourself.

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