Recently, Shola opened “MoneyNow” a digital finance company that helps users make payments and perform other monetary transactions including money transfers, cash withdrawals, and savings.
Her startup has six employees who help run the business. But every once in a while, there are certain tasks that require a scriptwriter, an editor, a videographer, a software developer, a web designer, etc.
While some of Shola’s employees can perform a few of these tasks, Shola very well understands that adding these to their other many tasks will overwhelm them and reduce the quality of output. Shola also knows she can’t go around hiring everybody because she needs a service, but these tasks have to be completed; her business depends on them.
Shola finally decided to outsource these services to professionals outside her company so she and her team could focus on their core strength and invest more time actually building the business.
But what is outsourcing and how can it be beneficial to you?
As the name suggests, ‘Outsourcing’ is a business practice by which companies hire another company or outside personnel, to carry out activities that can be done internally.
The word which originated from the phrase “outside resourcing” simply refers to an operation where companies hire a party outside themselves to perform services and create goods that traditionally would be performed in-house by the company’s own employees and staff.
And then the question comes; why should you outsource a service that can be done in house? What exactly are the benefits?
For one, It cuts costs.
Outsourcing generally is a budget-friendly and cost-effective operation. This is because outsourcing follows the basic ‘pay as you go’ principle i.e. you (as the head of the SME) pay for a service or staff only when you need them. Doing this automatically reduces the extra cost that in house workers incur via bonuses and salaries.
It increases in-house efficiency.
When you outsource certain tasks to an outsourced partner, the workload on the employees is reduced.
The relationship between workload and efficiency is a negative one which means the higher the workload, the lower the efficiency and vice versa. In other words, if the workload in your SME is reduced, the general efficiency of your business would increase.
One of the most overlooked benefits of outsourcing is Risk Management. If by chance your SME faces unexpected problems either due to natural calamities, technical crisis or market fluctuations outsourcing, allows offshore partners to continue with their assignments regardless. This is especially beneficial in bringing the company back on track.
The current Prime Minister of Singapore once said: “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business”. This is because Outsourcing gives you a competitive edge over your competitors simply because through outsourcing, you are not only providing your customers with best-hired services but also increasing your productivity while doing so.
Do you see yourself outsourcing anytime soon? Or have you outsourced for staff or service before? Tell us about it in the comments below.