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The Emerging Enterprise - Is It Time for the Hired Guns? Part 2
Is It Time for the Hired Guns? Part 2
Determining your best options for outsourcing
By Barbara DePompa Reimers
Increasingly, small businesses are finding they no longer need to be hamstrung by limits to their human resources, or the company's ability to manage complex business processes, finances, or even sales and marketing.
In today's competitive climate, even small businesses are seeking ways to outsource non-critical functions as a way to achieve strategic goals, reduce costs, improve operational efficiency or boost customer satisfaction.
For instance, mid-sized catalog retailers are outsourcing call centers. Banks of all sizes are outsourcing their marketing departments. The outsourcing of accounting and audit functions is no longer considered unusual for many organizations.
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The trick for smaller businesses is to decide which tasks they can successfully outsource at a competitive price. To do this, most small businesses must take the time to identify tasks the enterprise is uniquely qualified to undertake. Initially, it may not be clear which tasks a company should farm out.
That is why, in many cases, small businesses are finding that conducting a "needs assessment" is the best way to identify target areas for outsourcing. A needs assessment enables top executives to fully understand the company's operations and people -- and in some situations, its customers.
Here are two helpful assessment steps to help uncover which tasks are targets for outsourcing in your company:
- Identify the tasks that are not a critical part of your company's core business, as well as some of the daily "headaches" most personnel would be pleased to have eliminated
- Determine which of those tasks an outsourcer may be qualified to take over, at a competitive price, with the assurance of fulfilling quality and performance standards.
Large corporations have used technology outsourcing for decades. But nowadays even small companies can offload many technological responsibilities, since purchasing, maintaining and upgrading computers, applications, and Internet services can be an aggravating distraction. Leading vendors such as IBM, Hewlett-Packard and Compaq can help. So too, can smaller providers such as eMachines.
Other areas to consider for outsourcing include:
Business processes: Depending on your company's specific business needs, there are a variety of service partners that can help improve or remove the burden of daily business processes. There are also online business services available from suppliers such as Office.com, Inc.com and DigitalWork, that offer turnkey, fully-hosted online business centers for banks, financial institutions, ISPs, and other small businesses. DigitalWork, for instance, provides over 35 online business services, in functional areas such as marketing, sales, advertising, HR, finance, and IT, for small business customers and larger ones alike.
Finance and accounting: Accounting firms and CPAs, even some financial institutions, offer outsourcing assistance to small businesses.
Human resources: The Information Technology Association of America reports the greatest need for IT workers is in small, non-IT firms. Companies with 50-99 employees will need 1 million IT workers next year, or 70% of the total demand for all new IT employees. For fast-growing companies, a firm like SCI Companies or AdminiStaff may be a better option.
The American Staffing Association will help you locate staffing companies by city and state.
Sales and marketing: This area includes CRM, call centers, field service operations, help desk support. Again, there are numerous tools and services available to small business customers who need assistance in sales and marketing. For free marketing tips, you can start by checking out the Internet Marketing Center or Guerilla Marketing.
Outsourcing industry experts say it's key to adopt a methodology that describes the various steps to be performed by the service provider and lays out the project's parameters in detail to help hone in on, and properly manage, a service provider.
Words For the Wedded
When managed properly, outsourcing can bring enhanced profitability, increased efficiency and more cost-effective operations. Outsourcing can add value, and create predictability and reliability for the management of the offloaded project or function, enabling an organization to focus its talent on core competencies.
In reality, however, the relationship between any organization and an outsourcing services provider is often compared to a marriage. This is why the Outsourcing Institute has recommended companies pay close attention to the following details when selecting and managing outsourcing services providers:
Price: Lowest cost doesn't always mean best value. Remember there are multiple factors, such as cultural fit, that determine whether or not the relationship will be successful. Consider them all.
Contract Length: Opt for shorter term. If the relationship is going well at the end of two to three years, renew the contract. Just remember to go over the contract carefully, addressing any terms that need adjusting or updating. The outsourcing contract should always include procedures for amending the contract as the needs of the business change.
Relationship Management: Be flexible. Organizations often enter into outsourcing expecting to retain complete control of the relationship. Would that work in a marriage? A successful outsourcing relationship is grounded in trust and cooperation. Allow the vendor to do what it does best while you concentrate on what you do best. Benefit from the vendor's strengths and expertise.
Performance Measures: Set carefully up front. Establish performance measurement criterion before signing on the dotted line, and address them on a consistent basis. Insist on a contract complete with service level agreements that include both financial incentives and penalties for results that travel above or below the delineated terms of the agreement.
Communication: It's a two-way street. Most successful relationships have one thing in common -- the partners communicate with each another, whether they are satisfied or disappointed in the relationship. Establishing a team of individuals whose sole responsibility is to manage the outsourcing relationship and report its performance to senior management, as well as to keep employees abreast of the relationship's status, is highly encouraged.
With careful planning and attention to detail, your outsourcing relationship can greatly enhance your success in the marketplace.
Barbara DePompa Reimers is Editor of TechWeb's Small Biz.
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