Strategic outsourcing is a method businesses use to "farm out" essential services that are better suited for third parties to perform than their in-house talent. The act of engaging in a strategic approach to outsourcing can help businesses in a number of ways.
In the following article, we'll be going into just what those advantages are. We'll also be discussing five of the best strategies you can use to get the most out of it. Let's begin!
Strategic outsourcing helps companies cope with growth and restructuring in ways that allow them to maximize profitability. This is particularly true once you've shed the burdens of IT infrastructure.
There are several components that go into this. You need to be aware of what they are as you weigh whether the time is right.
The first advantage that strategic outsourcing will bring to your company is the ability to lower costs. When you have employees doing things that could more easily be outsourced, you're growing your payroll for things that may not necessarily add productivity.
You may incur an additional expense. However, if you're able to eliminate a payroll position or redirect your employees' efforts to something more productive, it's a net gain that will lower overall costs.
One experience that companies may face as they grow is a loss of focus. To accelerate the growth of your business, you need to be able to focus on the core components that give you a competitive advantage over your competitors.
We're willing to bet that, in no way, is how well you can collate papers one of the core components of your business. Pulling your best talent off menial, though necessary, tasks is a great way of helping your company right its focus and speed up revenue gains and the overall business footprint.
Another big advantage that strategic outsourcing can provide is giving you a more knowledgeable workforce. Continuing education is essential in pretty much every profession. You want your people to know how to do their jobs better, now and in the future.
Placing them on tasks that have nothing to do with the growth of their talents is no way to do this. Instead, you should redirect menial or second-hand tasks to a third-party and use the added time to benefit employees' education. They'll deliver better results for you in the long run if you do.
When the team is working at full capacity and focus, they're able to move and pivot the overall organization in new and interesting ways. Strategic outsourcing will enable yours to see new possibilities in the industry and come up with additional revenue-generating ideas for products and services.
If you don't believe it will just consider Google's 20-percent rule for allowing employees to cultivate their creativity. This wouldn't be possible if Google was expecting its employees to do things that had nothing to do with their talents.
Another benefit that comes out of strategic outsourcing is the ability to form strategic partnerships with third-parties. If there's a way you and the other company can help, you can eliminate or greatly reduce out-of-pocket costs in an exchange of services.
Working side-by-side, like with IT services, for instance, can help you enhance your revenue streams by creating new products and services. It also can help by more efficiently producing existing ones.
Now that you know the advantages of strategic outsourcing, it's time to take a look at the five strategies you will need to employ right away. Let's continue!
The first of the outsourcing strategies you should be employing for the improvement of your business is to take an overview of what needs outsourcing in the first place. This can vary depending on your industry, but you can generally check two key areas to figure things out.
No one knows the existing processes and workflow of your business better than the people doing them every day. That would be your employees.
Take some time to interview them about their jobs and pick their brains about any possible efficiencies that could be taken advantage of. Make sure the interview process is non-threatening and team-oriented as employees can become defensive under the wrong circumstances.
Where are your biggest expenditures in the company budget? How do they compare to other similarly-sized companies within the same industry? What are all of you doing to combat inefficiencies?
As you do a deep-dive into your budget, look for the areas that are consuming most of your resources. Compare those to the return on investment they're producing. If you can't justify, it's time to consider outsourcing.
Another part of learning how to outsource is figuring out when to do it and how to go about rolling it out. Once again, there are two essential components you'll want to pay attention to as moving forward with implementation.
Every company has short-term, mid-term, and long-term needs. Sit down with your staff and figure out what those horizon lines are. Sometimes the worst thing you can do is "power through" with the intention of outsourcing at a later time.
While you may figure the company doesn't currently need the additional expense, don't get blinded to the lost productivity. If the responsibilities are piling up, chances are good your employees aren't getting as much done as they should be.
Any consideration of outsourcing must be sensitive to how the decision will affect existing employees. Figure out a time to communicate with your employees individually about expectations moving forward.
Obviously, some will take on an even more vital role within your organization. Others may end up looking for a new job. These types of conversations demand sensitivity and respect for one's privacy.
Strategic outsourcing operations aren't always the easiest things to implement. That's especially true when they involve the elimination of positions.
Most companies never take satisfaction in cutting staff, and the employees certainly don't enjoy it. However, there are ways it can be done to the advantage of both players. Let's explore.
On the business side, cutting staff is the natural outcome of eliminating redundancies. Redundancies happen when an existing employee is doing things that will be entirely handled by the third-party outsourcing firm moving forward.
If the employee doesn't have enough additional duties and training to redirect, you may have to face the fact that you made a bad hire. It does not make sense for the company to keep this employee on staff, nor is it a good long-term prospect for the employee's marketability in the workforce.
Cutting employees should be done privately with grace and respect. If at all possible, the company should take steps to lessen the blow financially as well. Some tips:
It's never good PR when you get rid of jobs, but you can turn it into a win by showing you care about what happens to the employee. Try it!
After your outsourcing analysis is complete, it's time to think about the next step in the strategic outsourcing process. That's getting everyone on-board with all future goals. How do you do that?
Employees who stay with your company after a purge will probably see their duties change to some degree. They may be doing a lot of the same things, or they may be adding some new challenges.
It's important to make your employees feel empowered to make decisions. If they feel empowered, it will be easier to get their buy-in, and you're going to need their support moving forward.
As your employees get adjusted to their new duties, find ways that you can grow their talents. What good is strategic outsourcing if you don't use it as a way of making your people more productive and valuable within the organization.
The way you do that is to actually invest in them. Pay for their training and the travel it takes to get them there. Offer educational incentives for going back to school.
Once you've made the decision to outsource work to third-party companies or service providers, you have to follow up. Use a two-pronged approach in doing so.
First, evaluate how much more efficient your employees have become and what impact that's having on your bottom line. Secondly, look at any efficiencies that your partners are bringing to the table, exploring ways you can continue to work together and broaden your relationship.
The idea behind strategic outsourcing is to build a better company for your most valued talent. This also involves cultivating your talent into people whom you cannot live without. If you're ready to outsource your IT, but don't know where to begin, consider scheduling a free consultation today.
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