Is outsourcing a viable strategy for SMEs?
Author: Paula Jones FCMA
Outspan is often asked “how big is big enough?” A lot of small businesses get put off outsourcing because they think they’re just not big enough to benefit financially or operationally from the services. This article focuses on why outsourcing has now become a viable strategy for businesses of all sizes, including SMEs.
Read more by clicking on the continue reading link below.
Look out for our next blog: Are you experienced?
For more information on outsourcing for SMEs, contact: Outspan. www.outspan.co.uk, 0845 838 1965
In previous years, outsourcing has been the privilege of large corporations who have the resource to seek out outsourcing providers, manage large scale outsourcing projects and benefit from the economies of scale to make them worthwhile. However, in more recent years the increased access to technology, improved international communication and increases in the number of smaller outsourcing providers have allowed SMEs to take the advantages of outsourcing previously reserved for big companies. As a result of increased competition in the outsourcing industry and a proliferation of providers supporting SMEs, set up costs are much lower and flexibility higher – it is possible now to outsource a role that requires less than 1 full time person.
The most obvious advantage of outsourcing is cost savings (up to 65% for accounting services), however for SMEs the advantages gained can be much wider than just saving money:
1. Focus on core competencies.
For SMEs, with smaller workforces than large corporates, the ability to streamline the business’s staff into the areas that are most focussed on delivering products and services to the customers is a major benefit. This is especially helpful for start-ups or very small businesses who’s management can be freed up from time spent on tasks such as accounting and payroll and spend more time on business development and other activities key to the company’s long term growth. Once you outsource your accounting, that’s one area of the business you no longer have to think about.
2. Resourcing levels
Many SMEs use outsourcing to access additional resource, rather than replace staff. Outsourcing can be an effective way to gain access to this resource, gain access to knowledge or skills that maybe expensive to acquire in house and have the services provided without the management headache. A good contract with the outsourcing provider should ensure that the service you receive is what you expect without further monitoring, this is especially true if you outsource to a provider with a UK office, such as Outspan, who can manage the liaison between you and the end worker.
Jim Downey FCMA, Managing Director of Outspan says “the big draw for many of our clients is the ability to increase or decrease resources within a fairly short notice period. During a recession this is particularly helpful as clients are uncertain as to when they can commit to long term headcount but need the ability to cope with whatever the market throws at them, whenever it throws it at them.” Where a business has permanent staff on the payroll, there is less flexibility to turn up or down the resource.
4. Accommodating outsourcing within your business
When a large corporate outsources it normally entails a company restructure, often with redundancies, and certainly with expensive consultants brought in to make significant changes to processes. When an SME outsources, firstly there are rarely redundancies (either the staff were not there in the first place or they can be redeployed into value adding roles), secondly as a result of the volumes of work there is often more flexibility between the SME and the outsourcing provider, and the provider can often accommodate the existing processes of the business. Normally handover to the provider is minimal, however outsourcing providers such as Outspan also have an onshore consultancy service which can assist businesses with the transition where there transition is more complex.
5. Increased quality control and compliance
One of the concerns of outsourcing is that quality falls and compliance with regulatory bodies fail. However, the opposite is normally true. As outsourcing providers specialise in their field, for example accounting and bookkeeping, they are up to date with the latest compliance regulations and have strong quality control systems in place to ensure that they produce work to a high standard. For the accounting outsourcing provider, quality and compliance are core competencies.
So how can SMEs take advantage of the benefits of outsourcing?
Step 1: Determine what to outsource. Look at the core competencies of the business and aim to outsource those activities that are not core.
Step2 : Carry your existing staff with you in the decision. Often the word “outsourcing” can bring fear and resistance from staff where they feel that their jobs are under threat, this is not helpful particularly where no redundancies are intended. Open communication with all will ensure a smooth process.
Step 3: Choose your outsourcing provider. Assess what your requirements are. Do you want to offshore entirely? Do you want to keep the services onshore? Do you want to take advantage of the cost benefits of offshoring but have the comfort of contracting onshore, by choosing a provider with an onshore presence?
Step 4: Get quotes and negotiate the contract. Spending time on this stage, particularly the terms of the service level agreement within the contract will save time later.
Step 5: Handover the work and start your long term relationship with your outsourcing provider, maintaining good communication throughout.
Contact Outspan today to discover how you too can benefit from outsourcing now at www.outspan.co.uk, 0845 838 1965
Sources: ICT Standards.com, Reference for Business.com