Outsourcing Strategy – A Focus on Best Practices

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In our previous article, Outsourcing 101, we gave you a general overview of outsourcing; what you can outsource, when to do it, how to do it and presented a case for why you should outsource certain projects, especially as a start-up business or one focused on a new growth phase.

Now, let’s talk about the details and provide you with some tips on the best way to use outsourcing to your benefit and avoid the pitfalls and pains that sometimes go along with an outsourcing strategy.

First, let’s address some of the pros and cons of outsourcing:

Potential Benefits (Pros) of Outsourcing

  • Reduced labor/project costs
  • The ability to tap into a new knowledge base without training employees
  • Time management – free up your time involved with day-to-day implementation and task work
  • Flexibility and speed to manage projects
  • Time zone factors (pro component: depending upon your outsource team, you can have your team working while you’re sleeping or on weekends)

Potential Challenges (Cons) with Outsourcing

  • Control over project communication
  • Privacy  and intellectual property concerns
  • Slow responses times
  • Language barriers (in the case of overseas outsourcing)
  • Time zone factors (con component: sometimes it’s more challenging to coordinate schedules if time zones are vastly different).

What is the best way to overcome the challenges, take advantage of the benefits and have a successful experience when using an outsourcing strategy?  One of the simplest and best ways to have the greatest success with outsourcing is to have a clear-cut understanding about the work you want to outsource and have realistic expectations about the outcome.

What Should You Outsource?

A simple and practical way to determine outsourcing tasks or projects, or even longer-term roles in your organization is to start by asking yourself some key questions.

One of the most powerful questions you can ask yourself, and your in-house team is this:

What is the highest and best use of YOUR time? In small- to mid-sized firms, a lot of what determines your outsourcing strategy is answering the question of what makes the most sense to outsource.

Whether you are a C-level executive or project manager in your company, ask yourself these questions:

  1. What are you spending the most time on that is taking you away from your most productive role in the company?
  2. Are you focused on revenue- and efficiency-generating activity?  If not, what tasks should you delegate or outsource to provide yourself with more time for your most effective work?
  3. What do you enjoy doing the most in your organization? (usually a great indication of the best use of your time)
  4. What are you not very good at but you’re doing it anyway because of “time” constraints, “budget” or other “excuses?”
  5. What do you really dislike (is “hate” too strong a word?) doing in your organization?

Once you’ve answered these key questions, you should have a good framework to create a list of the most important tasks to be outsourced in your organization. Then you can move on to the next steps.

A Checklist for Outsourcing

  • Are you clear about the task or project to be outsourced?
  • Do you have an outline, manual or at the very least, clear instructions about the task or project to be outsourced?
    • Specific task/project description
    • Expected performance
    • Cost/budget of project (is it billed by the hour or by the project?)
    • Clear deadline/due date
    • Skills required
    • Resources required
    • Who in your organization will be interfacing with and managing the outsource contractor or outsource firm?
    • If this is a task that is likely to be repeated over and over, can the initial outsource contractor prepare a step-by-step “manual” or outline of how to complete this task?  Then you have a resource you can use again in the future, either as part of an operations manual or as a time-saving resource to pass on to another outsource contractor in the event your initial contractor does not work out.

It is a very productive exercise to start making lists or organizational charts showing the tasks that are part of your every day systems.  You will likely find that there are many tasks that are simply bogging down internal resources that can easily be outsourced.  You will probably also find holes in your systems that can be filled by outsourced resources. And as you dig deeper, it is quite likely that you will discover that there are very few activities in your business that actually cannot be outsourced.

Keep an open mind, do your exploration and see how you can raise the bar in your company by outsourcing processes and tasks.  Efficiency, productivity and profits will all be positively affected.