When is the right time to outsource?

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01 Mar 2024

When is the right time to outsource?

How many businesses generate their own electricity, dispose of their own refuse, or do their own tax returns? Probably very few, and for good reason.

These are all necessary business functions, but it would be a waste of time and energy to do them yourself when it’s much easier and cheaper to outsource them. A specialist can do a better job than you could. Leaving you with more time to focus on your core business.

So it’s important for even small businesses to ask if there are better ways they could be doing things? Are there savings or efficiencies waiting to be achieved? Could outsourcing be the route to doing so?

There was a time when outsourcing was something that only made sense for large companies. But increasingly small and medium-sized Irish businesses are also waking up to the power of partnership. A growing number of managed service providers operate in Ireland, with services available at all price points.

But even if you think outsourcing might be viable for you, it’s still a challenge to know when to pull the trigger, how much to spend and which functions it makes sense for you to outsource and which should be kept in-house.

Know your strengths

You probably wouldn’t draw up a legal contract yourself because you know it makes a lot more sense to employ a solicitor. The same is true if there’s an electrical fault in your premises or your plumbing springs a leak.

Sure you could roll up your sleeves and try to fix the problem, but sometimes it pays to know what you’re good at and what you’re not. Contracting someone to do something not central to your business such as managing your accounts, building your website, handling your IT queries often makes a lot more sense than trying to do everything yourself. The act of identifying your strengths and weaknesses can help you focus on your overall business goals effectively.

Understand where you add value

Know where the value proposition is from your customer’s point of view. Why do they do business with you and not someone else? That’s your value proposition, and it’s something you should lean into. Once you know what that is, look around your business and identify which activities contribute to it and which don’t.

For example, your IT function is important to how your business operates but do you really need to do your own tech support? What about cybersecurity? Could it make sense to take on a partner to handle these things for you, so you can put your focus elsewhere?

Asses what is on offer

There are many vendors in the Irish market offering outsourced managed services, at various price points and degrees of integration. As well as traditional services like accountancy and law. It’s increasingly common for Irish companies to outsource IT services and support, human resources and payroll functions, digital marketing and public relations, facilities management, customer support and supply chain logistics management.

Not every business will have equal need of all of these but it makes sense to look into how these providers could help push your business goals forward.

Reduce the HR headache

For some jobs, specialised staff are expensive to employ and hard to find and employing a managed service provider can take this significant headache away. Not only will they have access to better trained and more current staff than you will, they’ll also be able to tell you what tech you need, what you don’t, and when it makes sense to upgrade.

Know when to jump

Done well, outsourcing should improve your company’s bottom line. But at the outset, there will probably be additional costs as you adjust to new ways of working. This initial cost can be daunting, particular for smaller businesses that might be operating on tight margins.

So, how do you know when to pull the trigger? Consider the following questions:

  • Is your business growing at a pace that your current team cannot support without compromising on quality or deadlines?

  • Are you increasingly in need of specialised skills that are not your core competency?

  • Are your operating costs becoming unsustainable?

If the answer to these is yes, the solution may involve outsourcing.

What should you keep in-house?

Any function that directly supports your business's core competency and contributes to a competitive advantage should generally be kept in-house to maintain control and foster innovation. While advisory services can be outsourced, the actual strategic planning and decision-making process should remain within the company to ensure alignment with the business's vision and culture.

Likewise some aspects of HR can be outsourced, but core functions related to company culture, employee engagement and talent management are best handled by the owners of the company. They’re too important.

For Irish business owners, the decision to outsource should not be taken lightly. It requires a strategic evaluation of your business's current and future needs, a clear understanding of the benefits and risks and the careful selection of which functions to outsource.

If you would like to chat through your outsourcing options and get free digital advice, book a 1-2-1 call with our V-Hub Digital Advisors now.

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