It is never an easy decision to decide when to outsource. Outsourcing can lead to a lot of negative effects and impacts on your business. One of these is a loss of morale. If your employees see that you are transferring business or tasks they feel they should be doing over to other companies or overseas, they may develop some resentment or feel as if they are not important. The main thing is to emphasize to your team the importance of cash flow and the overall health and profitability of the company.
If appropriately skilled people happen to be another country, or working as an independent contractor this is still something that needs to be explored before you consider adding another person to your payroll. Think of the risks and benefits to your company – Would your team run as smoothly if some or all of your team worked in different locations? Are there any benefits that can be passed on to customers, suppliers or partners in outsourcing versus keeping the work in-house?
One thing you could find is that you end up with less control over what happens in terms of timely delivery, quality or productivity. This could mean you need to implement additional management and if your only purpose for outsourcing is as a cost saving exercise, the savings can be eroded through longer hours spent managing and overseeing others.
When outsourcing overseas you can have language or cultural differences to over come. This means that your induction process takes a lot longer, as you smooth over misunderstandings and false expectations. Not all developing nations have the reliability of services that we experience, so despite your workers best efforts they may not be able to work because they haven’t got an Internet connection or even electricity.
Overseas workers may work in a different time zone to you, so coordinating times when it’s convenient to speak ‘live’ to one another can cause difficulties. Even if you outsource domestically, the company you outsource to could be hundreds of miles away making regular meetings difficult.
The simple truth is you can get some things done a lot cheaper overseas in developing countries. Which makes it in your company’s best interest to explore the best possible deals when it comes to human resources costs. Beyond wages most companies have taxes, bonuses and many other costs associated with every employee. These costs can also vary at different times of year so that meeting your payroll obligations at particular times of the year rather challenging from a cash flow perspective. When you outsource, depending on how you arrange your contracts you have relatively fixed known costs with most fluctuations also being directly linked to increases in output.
Fewer overheads also make outsourcing attractive to businesses with a keen eye on the bottom line – Less office space to rent, less office equipment to hire and no additional out goings to pay (a huge advantage for businesses who outsource overseas so that they can operate twenty four seven).
Flexibility is another great benefit you get for outsourcing. The world is changing rapidly as are the needs or consumers, being nimble in business helps you keep up with demand. With an outsourced team you are able to restructure and modify the way your business operates overnight without the penalty of termination payments and long drawn out fire and hire cycles. This keeps your business agile and in tune with your customers and market at lightening speed.
Particularly when you outsource overseas, you are helping to nation build in less advantaged parts of the world. Bringing safety and education to those who with even a modest income are able to affect important large-scale change in their lives and in the community where they live. Through the work practices that you teach when you trust someone and outsource work to them you are creating the global economy and extending your network. The people you outsource to today may very well become your international reseller tomorrow.
So examine your requirements carefully before deciding on hiring or outsourcing. Think beyond cost cutting and look to the future to see if there are ways to leverage either situation to your advantage.
Outsourcing can be something you do for cash flow reasons that takes your company to the next level, or it can cause you grief and create dissention among your ranks. Handling this transition skilfully is essential. As long as you do your research, you are likely to find an outsourcing agency that will work for you and fit in with your company’s needs. Just be sure to interview the relevant parties carefully to make sure you’re on the same page with similar expectations. Then be sure to talk to your employees so they understand their jobs are not at risk. This will ensure that everyone feels safe and productive in whatever new situation you create. Then you can watch your profits slowly but surely begin to increase.