Today, a competitive company requires business owners to keep up with the newest business management, sales, marketing, and other essential business strategies. Many believe that outsourcing is an excellent method to conduct business with so many elements to address effectively.
The Deloitte Global Outsourcing Survey 2018 showed that companies of all sizes outsource key business activities to disrupt the market, increase their efficiency and serve consumers better. Meanwhile, Clutch reported that 8 out of 10 small enterprises (80%) intend to outsource business operations in 2021.
Companies can save time, expand their business, and collaborate with experts in various business tasks with outsourcing. Overall, outsourcing offers unique advantages for companies.
If this is your first time outsourcing, here are the effective methods followed by successful companies in outsourcing:
Table of Contents
Identify Which Business Activity You Need to Outsource
It may be difficult for company owners to abandon any part of their business. You may not utilize your time and money to the best of your ability, including marketing, copywriting, accounting, customer pitches, and public relations. Keeping up with everyday business tasks like posting to social media or responding to every email you receive may prevent you from working on a large scale.
Similarly, suppose you lack the required skills to perform critical activities such as paying taxes or writing website content. In that case, the time you spend trying to do them may be better spent on another aspect of your company that generates additional income.
While outsourcing may cost you money, it may free up precious time for you to concentrate on developing your company. If you know your average hourly rate, you can determine if the time you spend on outsourcing jobs is worthwhile – or whether your time would be better spent elsewhere. At the same time, a VA expert handles particular essential tasks.
Consider the Outsourcing Costs
Although businesses sometimes opt to outsource because they anticipate saving money, outsourcing involves expenses that may not come to your mind first. For example, you may spend more time and money while selecting the appropriate vendor. Negotiating and drafting a contract may, in some instances, bear additional legal expenses.
To give you an idea, outsourcing costs in the Philippines are often determined based on resource expertise, several individuals you want to employ, and contract duration.
Outsourcing companies determine rates based on labor costs, service charges, and benefits required by the government. It enables them to develop distinct service models that suit their different target markets.
You’ll be charged all labor expenses since market prices determine these costs for the jobs you wish to fill. Moreover, these expenses will vary based on the degree of skill—whether the potential for entry-level, experience, or expertise.
Also, each outsourcing business will have its service costs, which usually include a set charge per employee per month to cover all operational expenditures. They typically include equipment, utility costs, taxes, and more.
Lastly, Philippine labor regulations specify that each employee is entitled to several benefits like night differential, health insurance, social security, etc. Don’t worry; your outsourcing partner will manage all these things as part of your payroll.
Choose Your Outsourcing Partner Carefully
Like how careful you are with the selection process for your new employees, you have to be very selective when choosing your outsourcing partner. The vast majority of small company owners get into trouble by initially selecting the first outsourcing company they’ve inquired about.
When selecting an outsourcing partner, think of it as a collaboration. Think critically about your choices. Research and make comparisons among top outsourcing companies and assess the pros and cons before getting their service.
Some questions can determine the credibility of the outsourcing company. Has the provider shown continuous progress throughout its operations? Are they well-known in their industry? Consider also their business experience, location, adaptability, tax regulations, and language or cultural barriers.
It will take time to choose the vendor or employees that will be the best match for your requirements, so avoid acting on impulse and carefully select your vendors or workers.
Conduct an Interview to Potential Outsourcing Partner
Whether you’re outsourcing a small customer service department to a contact center across town or a big manufacturing division to another business, do your interview in the same manner as you would for a contractor. Here are some valuable tips in conducting an interview:
- Determine the services that your company needs from a third-party provider. Write a short description of the nature of the job and the qualities you want in an outsourcing firm. Make a list of potential interview questions that may assist you in keeping the interview on the right track.
- Make an appointment with the outsourcing firm to do the interview. Avoid any distractions during the interview.
- Inquire about the outsourcing company’s background, its capacity to fulfill your company’s requirements, and its stability. Also, ask whether the outsource provider complies with all applicable rules and regulations mandated by the government.
- Take notes throughout the interview to help you recall when deciding which outsourcing business to employ.
- Inquire about the outsourcing provider’s plan in resolving employee-related issues and compensating for income lost if the outsourced business does not perform as promised.
- Lastly, write your summary while the interview is still fresh in your memory; this will ensure that you have an accurate record to refer to when choosing your company’s outsourcing partner.
Review the Contract
Your contract establishes the dynamics of your collaboration in two ways. It sets expectations at the beginning of the partnership and acts as a reference point as you move forward.
A contract should include payment terms, creative and other rights, expectations, and responsibilities and should consist of an exit process. It is critical to have every contract reviewed by a lawyer.
If the vendor falls short of your set quality standards over a certain period, the contract should include a clause allowing you to cancel the relationship.
If this is not feasible, establish a date for the contract’s renewal so you may decide whether to continue your business relationship with your outsourcing partner.
Any business is constantly looking for the best strategies to increase their business’s profitability with fewer expenses. When you begin to grow your company, you can consider outsourcing as much work to competent but affordable external service providers. You just have to be very careful when choosing the best outsourcing partner.
You can get top-notch experts whenever you need it without incurring the costs associated with full-time staffing. By concentrating on your core skills and outsourcing other tasks to skilled freelancers, you can compete with more prominent companies’ delivery capabilities while maximizing your profit to the fullest.