To outsource or not, that is the question

With the benefits to gain from outsourcing, nobody can blame you for treating it as a business cure-all. After all, what better (or appealing) solution is there than having someone to handle your challenges? However, understanding when to outsource is the first step to gaining a competitive advantage with it.

Here's some guideline to help you decide when you should outsource to a freelancer (i.e. when you want the effortless way of getting results):

 

 zomwork-official-guide-get-results-outsource-freelancer

Clearly, getting a freelancer is the winning choice for low effort and fast results.

If you need a more methodical way to make a decision, here's a matrix you could rely on. (Though we'd love to contest this matrix with our guide above 😬)

The Outsourcing Decision Matrix

Outsourcing_Decision_Matrix_v1_Mindtools

Source: MindTools

Naturally, with an official chart now in the mix, we can get down to official business by summarising the chart insights.

When thinking of outsourcing, these are the 2 crucial questions to consider: 

1. How does the task contribute to your competitive advantage?

Is the task vital to your business's competitive advantage? This is where your business has great expertise and aptitude in, forming the foundation for you to build your strategic importance and distinguish yourself from competitors.

Let's use an example with a company that produces and sells clothes. Upon receiving customer orders, these clothes will need to be delivered. However, delivering clothes is not the expertise of the company. Furthermore, it is unlikely that how these clothes are delivered would cause them to gain or lose customers.

As such a task does not add to the business strategy, it does little to enhance their competitive advantage. Thus, this task can be outsourced to a delivery company which has the expertise to complete it more efficiently. 

2. How does the task affect the operational performance of your business?

Operational performance is all about the effectiveness, efficiency and productivity of a company. This performance is then used to measure how well the business is running to meet its goals.

When reviewing a task to be outsourced, take into account if it will decrease operational and labour costs while increasing revenue. Also consider if the tasks are critical to the daily running of your business or if they help you achieve your objectives.

For instance, outsourcing necessary but mundane tasks such as payroll processing will free up internal resources which can be used to build your competitive advantage. Outsourcing tasks which occur on a project basis such as requiring a photographer for an event can also improve cost efficiency. This takes away the need for businesses to incur extra costs by adding internal headcount which could be deemed unnecessary once the project is over.

After asking yourself these 2 questions, plot your task on the Outsourcing Decision Matrix to get a sense of how you should proceed with it.

 

Further Outsourcing Guidelines

You should consider outsourcing if you have projects that are:

  • Not central to your business strategy in making profits or attaining competitive success
  • Highly repetitive and time-consuming
  • Temporary or one-off
  • Less expensive to have someone else do it than to do it in-house
  • Highly specialised in terms of skills and knowledge required

Companies should not outsource functions that seem insignificant, but are in fact necessary to the business, such as customer service processes. Processes involving customer engagement should be kept in-house as these are vital in building your brand's image and enhancing your customer relationships.

When outsourcing, it is important to find reliable and quality service providers or freelancers to complete tasks for you. Outsourcing is a good strategy to cut costs but one should be mindful that the quality is not compromised by lower prices.

 

How to Begin Outsourcing

With online platforms such as ZomWork, you get to choose from a pool of readily available talents. Evaluate their portfolios to make an informed decision about who would be a good fit for your outsourced project. Furthermore, there are tools to help you manage your communications and administrative processes so you can handle your project safely, efficiently and expertly.

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Topics: Outsourcing, SMEs, Start-up, Entrepreneur, Business

Jing Rong Chang

Written by Jing Rong Chang

Integrated and Digital Marketing | Content Creation. Also, either eating (too much) desserts or dreaming about snow.

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