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6 Common Pitfalls of Outsourcing – And How to Avoid Them

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Outsourcing can sometimes get a bad name, but if you do your due diligence, there’s no reason that it can’t be a win-win situation.

Deciding to outsource can be scary…

For SME owners with limited budgets, the question of whether to outsource your processes is a tough one. There are so many factors – affordability, reliability, how it compares to in-house and other options, the opportunity cost of choosing not to outsource operations – or perhaps you’re put off by bad experiences your business contacts have had. You also need to ensure that you have the resources to manage the process of any outsourced work. According to shared services and outsourcing consultant Rachel Anderson, ‘the management overhead needed to get the maximum benefit from your outsourcing deal may negate some of your headcount and cost reductions’.

It doesn’t have to be unpleasant though…

It’s important to make a careful and considered decision, so that if you do decide to take the plunge you won’t be another horror story. Taking the time to research your options and look into all the relevant information when deciding whether to outsource, how to outsource, and who to form partnerships with is crucially important, especially when limited resources are at stake. Making sure that your contractor is flexible and on board with your goals and values is an important part of this – Rachel Anderson’s recommendation to SMEs is to ‘partner with your supplier to tailor their service to your specific needs’. By doing your background work and viewing outsourcing as a partnership with common goals rather than a traditional client-supplier relationship, you’ll avoid falling prey to its many pitfalls.

Myths about outsourcing (and why they’re wrong!)…

It’s true that outsourcing has the potential to go wrong – but it’s unfair to say that this is the norm. Myths can tend to grow around the positives and negatives of anything in business, and outsourcing is no different. Outsourcing is certainly not for everyone, but hearing about its potential disadvantages could lead to a false belief that it’s not for you.

So what are the disadvantages of outsourcing, and can you escape them? Here we examine six of the main reasons people give not to outsource and explain how, with the right approach, these banana skins can be avoided…

1. Outsourced people don’t really care about my business

If you find yourself thinking this, just remember that your business is your contractor’s business. If your company flourishes and grows as a result of their input, they know that they’ll get more work coming their way, from you and from referrals you give – and on the flip side, if they fail to deliver, they know that they’ll lose you as a customer. Ask around to find a reliable partner in the beginning – it’ll save you a lot of headaches moving forward.

2. My outsourced operations will become faceless

Actually, any contractor worth their salt will be keen to form a close working relationship with you and integrate as many of their team into that relationship as possible. By fulfilling their promises to you, they’ll know that they can quickly build rapport and gain your trust. Check with your potential outsourcing partner how they like to work before teaming up with them, and if you don’t find common ground, look for someone else to do the job.

3. My team will suffer from not having someone always available on site

There are many benefits to outsourcing to a company with a bigger team – rather than relying on one in-house person, having to work around their holiday and sick leave, and dealing with the costs and legal responsibilities of employing them, you’ll have access to a whole team of experienced professionals for a fraction of the cost and with much less hassle. This team will come with a variety of backgrounds, experience and specialisms, creating a pool of knowledge that allows them to work more efficiently and get the right people doing the right tasks – this level of flexibility simply isn’t available with a single staff member. And with access to remote technology, you’ll often be getting your support needs met quicker than if you had a dedicated staff member. So make sure your contractor can provide the kind of support you need before you start working with them.

4. Costs will spiral out of control, and I’ll never know what it will cost me for the year

Contractors should only ever bill you for work you’ve agreed on, and most will be willing to provide monthly invoices and annual roadmaps to help you plan your budget. This will give you a clear idea of your costs for the year so you can compare their pros, cons and costs with those of a full-time staff member. It’s worth taking the time to be clear on what you want a contractor to do for you, and go through costings with several before picking one.

5. I can’t trust strangers with my data and IT systems

This point of view is understandable – and this is where referrals come in; the best thing you can do to establish trustworthiness when selecting an outsourcing partner is ask for references or speak to their existing clients. If you choose carefully in the planning phase, you’re likely to quickly build trust and understanding with your contractor, especially as you start to see them meeting deadlines and making good on their promises.

6. They will try to sell me stuff I don’t need

Again, your success reflects directly on your contractor’s reputation, and your satisfaction with them is important to their future business – so if they’ve got any sense, they’ll only recommend products that will help you remain within your budget and be profitable. At Priority One for example, when we provide IT Support we only ever suggest technologies we either use ourselves or are very familiar with. If you don’t understand what you’re being offered or you don’t know whether you really need it, get them to explain it until you do or ask a knowledgeable friend or contact for their opinion. In reality though, as long as you’ve been careful enough in the planning process, you should end up finding a company you can rely on to have your best interests at heart.

If you’re going to outsource your resources, the bottom line is that it’s important to take your time and make the right decisions – for more in-depth advice, you can watch the video below.

Sam De Silva, a partner at law firm Nabarro, is an outsourcing expert with a wealth of experience helping business owners. In the video below, he shares his vast knowledge and provides more advice to those who might be looking to outsource:

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Debbie Abbott

With a background in Media, Debbie manages our digital marketing initiatives and provides valuable blog content for those of us a little less-technical.

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