Every business makes an effort to keep one step ahead of the competition, but no business can be an expert in every field. This is especially true given the severe skill scarcity and inflation that small businesses are currently suffering. And why are we discussing this now?
Despite the widespread public belief that outsourcing is only done to save money by taking advantage of offshoring, outsourcing can also be done domestically. Additionally, it may allow businesses to access knowledge and a degree of productivity not possible within.
In light of this, let’s explore the benefits of outsourcing in Australia and whether it is ultimately the solution to the skills shortage and high costs that businesses are now facing in this week’s Let’s Talk.
Nicole Gorton, Director, Robert Half
“When organisations reach a point where they consider outsourcing some of their workforces, it is usually for the reasons of addressing a complex business challenge, reducing cost in particular areas of the business, accessing skilled or specialised services, or teams struggling with priority demands and needing to redistribute workload. Like many big business decisions, there are pros and cons of going down this path and it needs to be weighed up carefully before deciding if this strategy is good for the business.
“Arguments for outsourcing include cost saving, accessing skilled services or specialised subject matter expertise not available in the internal teams, taking the emotions out of hiring and firing, alleviating the workload of existing employees and the benefit of working in different times zones to get projects done quicker.
“On the other hand, outsourcing can sometimes result in losing control of the work being done, security risks when information goes offsite, different professional standards and levels of loyalty, and potential conflicts of interest when using similar services to competitors.
“Generally, if companies partner with the right provider, the advantages of outsourcing a company’s workforce for certain specialised projects or when faced with significant business challenges outweigh the disadvantages. It allows businesses to focus on their core functions and brand.
“However, choosing the right provider is key. Before taking action, companies need to understand the implications on their business and identify a vendor who can meet their expectations.”
Chris Willcocks, ANZ VP & Head Intelligent Spend Management, SAP
“Many industries, particularly manufacturing, have encountered supply disruptions due to labour shortages. A common strategy to address these disruptions is an increasing reliance on hiring external workers through flexible, hybrid working patterns.
“Previously, outsourcing was dictated by a need to save costs, however the current move towards external workforces is being driven by a need to quickly find available labour and talent.
“According to Economist Impact’s research, sponsored by SAP, approximately half of the C-suite respondents say their organisations will rebalance their workforce in favour of more external hires. However, a higher level of flexibility carries with it a considerable amount of responsibility for businesses.
“Businesses who incorporate the external workforce into their overall strategy will need to consider aligning their company direction and budget; ensuring that the procurement fits within company goals, provides value and aligns to set budgets.
“Businesses will also need to be conscious of and effectively manage issues, including protecting intellectual property, maintaining security and visibility, and be aware of continuity issues.”
Felipe Rubim, Vice President Asia Pacific, CI&T
“Outsourcing has become a critical strategy for most companies, with estimates pointing to an AUD$ 1 trillion spent in outsourcing worldwide. Historically, leaders have delegated business processes in areas such as Accounting, HR or Sales, aiming at reducing cost, increasing efficiency, and focusing on core competencies.
“Recently, digital transformation and global skill shortages have also become incentives for hiring outside experts. Leaders are finding it challenging to stay competitive and simultaneously keep pace with technological advances in areas such as cloud computing, application modernisation and Artificial Intelligence, to name a few. For most businesses, these pressures have shifted the question from “Should I outsource?” to “How can I do it well?”.
“Leaders must look at a few points to answer this question. They need to define what to outsource and what should remain in-house by identifying the company’s unique competencies. Outsourcing only works with the right partners, and some questions help to identify who they are. Are they onshore, nearshore or offshore? Are they in the right time zones? Can they bring efficiencies to complex projects? Are they transparent and accountable? Businesses also need to retain in-house knowledge to effectively project manage and pivot if things don’t go well.
“Knowing how to partner for success and deliver maximum value with outside experts is becoming a fundamental skill most companies need to master.”
Ashley Watkins, Vice President, Trend Micro ANZ
“There’s a common belief that if you can do it in-house then it will be cheaper in the long run. However, the benefits of outsourcing certain tasks to experts who are specialised in the field, together with better access to dedicated resources and more advanced tools can outweigh the costs. There can be a false economy in organisations wanting to do it all themselves, especially in times of economic uncertainty: it’s about recognising when external help is needed in order to take your business to the next level.
“In the wake of the pandemic, we are in a skills shortage crisis, particularly in the tech industry where businesses are desperate for additional talent to bolster their cybersecurity outfit. Fostering deep partnerships with external providers who you can trust is key to relieving the IT complexity and cyber skills gaps in the local market.
“Trend Micro launched its Service One offering in 2021 to address this issue, effectively providing local businesses and their security service providers access to the thousands of cybersecurity experts we have around the world, allowing 24/7 peace of mind. Such partnerships allow businesses to get the cyber talent they need today, instead of waiting for when the local skills pipeline begins to bear fruit.”
Matthew Thomson, Senior Vice President of Asia Pacific and Japan, Kofax
“Many businesses see outsourcing as a quick fix – just give your problem to someone else to manage. But if your manual processes include steps where human errors come into play, these errors will still occur.
“Outsourcing can also place unnecessary risk on your compliance and security. By handing over your data to an outside firm, you rely on others to protect valuable data from unknown threats and exposure.
“Cost savings are seen as a common benefit of outsourcing, but there’s no improvement or real savings achieved; the manual processes are just being done by different people.
“Removing the workload from the facility also eliminates a section of a company’s labour, whereas automation focuses on upgrading current resources and redeploying them in higher-value activities.
“Ultimately each strategy has pros and cons that should be carefully weighed, but whether managed in-house or by an outsourcer, manual processes should ideally be automated to reap the benefits.
“By automating manual processes, your business can eliminate errors, cut processing times by half, deliver 100 per cent accuracy, and increase capacity by as much as 50 per cent.”
Grayson Milbourne, Security Intelligence Director, OpenText Security Solutions
“According to OpenText Security Solutions’ 2022 Global SMB Ransomware Survey findings, close to three-quarters of Australian SMBs outsource their security to an IT or managed services provider; And of the SMBs that don’t outsourced their security, 79 per cent of SMBs would consider having their IT security managed outside their business.
“SMBs are known to have limited IT budgets and less resources to establish strong cyber resilience, hence they are easy targets for cybercriminals. While SMBs appear to be aware of cybersecurity-related risks to their organisation with 42 per cent ‘extremely concerned’ about ransomware attack impacting their business, 28 per cent are unsure if their organisation is a target for a ransomware attack and less than half are 100 per cent confident their business is able to fend off ransomware attacks. This shows there’s a weak spot in SMBs cyber approaches, but encouragingly, this is where outsourcing comes into play.
“Outsourcing helps control IT costs, reduces labor costs and ensures SMBs always have a trained and experienced IT team available. Having IT infrastructure that’s secure, well-run, and streamlined is a serious undertaking, and much of the time, requires a strategic partnership to roll out at scale. Seeing it as something to invest in, rather than a problem you may never outrun, is a way to reframe challenges as opportunities.”
Chris McDonald, VP of Growth, Cloudstaff
“There are two reasons why smart businesses consider outsourcing to overseas workers: cost savings and access to skills. Cost will always be an important factor but recent research we’ve undertaken revealed that most Australian businesses significantly underestimate the savings to be had, believing it to be around 30% on average rather than the reality of 50-70%.
“But there is also the opportunity cost of not having the headcount and skills you need to grow. Now more than ever, businesses are struggling to hire in this historically tight labour market. If they focus on Australian-based staff only, all they can do is poach existing talent from other firms creating a merry-go-round of employees that simply adds to wage inflation.
“While there’s no magic solution to the labour shortage, not even considering looking beyond Australia’s borders to source the skills you need makes no sense in this day and age.
“We find that while the initial motivation for employing offshore staff is often cost savings, the actual outcome is that freeing up onshore staff to focus on what they’re good at ends up being a huge driver of growth. Our clients tell us that as individual productivity and satisfaction increases, their businesses grow faster than their competitors.”
Shiva Pillay, General Manager and Senior Vice President, Asia & Japan, Veeam Software
“I believe that outsourcing has many benefits to a company. Within the technology industry, the shortage of engineers and decline in new talent entering the field has made hiring difficult, leading to increased pressure on existing staff to work overtime.
“Outsourcing fills the talent gap, freeing employees from mundane engineering tasks to focus on innovation and problem-solving. From a general perspective, this business model can make it easier for leaders to quickly adapt to changing industry conditions, reduce costs and improve productivity.
“The stress of non-crucial elements can be dealt with by third-party organisations, while internal staff can use this time to improve core competencies. It is important when outsourcing that communication and quality remain priorities, and this can be achieved by ensuring that your business needs are aligned with the right staff resourcing vendor.”
Michelle Kvello, Founder/CFO, Lantern Partners
“As with most things the answer is – it depends.
“Two ways i have seen outsourcing work successfully is:
- As a way to access senior leadership experience. Most roles within the C-suite are now able to be accessed without the burden of engaging a full time employee.
- Using offshore teams to create operational efficiencies. I’ve seen this done well across a variety of roles including virtual assistants, accounting and marketing production.
“However there are two key things to be aware of when outsourcing:
- At a senior level not all outsourcing offerings are created equal and it can become an expensive exercise if you don’t do the right amount of due diligence. Referrals are a great way to identify who will be a good fit for your business.
- At the junior level, have a really clear process that you want that outsource team to follow. Many small businesses don’t have this and expect their outsourced team to figure it out. In my experience that rarely works. Get your process embedded first and then outsource.
“It can be a very effective business strategy if implemented in the right way!”
Shannon Karaka, Head of Expansion ANZ, Deel
“Traditional outsourcing is often associated with the old adage of hiring cheap labour abroad as a way to replace domestic talent and wages. But that kind of outsourcing often results in management difficulties, particularly if changes within third-party outsourcing companies occur and lead to friction. This may also impact service delivery, which could fall below the expectation of your business’s standards. There is also a lack of flexibility, confidentiality and security.
“However, given Australia’s current skills shortage, local businesses are desperate for talent, and need it fast. In the vast majority of cases, they can’t find enough talent locally and must look elsewhere in order to stay competitive, grow and support existing employees. This is where global hiring can help.
“Crucially, global hiring is not the same as outsourcing. Businesses can access a global talent pool to hire the right person for the role, irrespective of their location. This dramatically expands the talent pool for local companies with competitive global talent. More broadly, we think this is the way Australian companies increasingly are going to build and expand – by finding the best talent at home as they get started, then growing their teams abroad.”
Mark Randall, Country Manager ANZ, WP Engine
“When managed strategically, outsourcing can in fact, alleviate pressures on resources, reduce costs and prevent loss of sales. Outsourcing website management, for example, can be a smart way for businesses to improve efficiencies, enabling them to focus on their core offering while maintaining a strong digital presence.
“Managing a website can be time-consuming, especially if it’s outside of your core competency. Often developers and marketers work on multiple platforms and don’t realise the hidden cost of becoming the “systems integrator”. Not only does this take them away from other priorities but without the right skills and resources in place a simple oversight could lead to a security breach, loss of sales and even damage brand reputation.
“Outsourcing website management to an agency can alleviate some of that pressure and free up valuable internal resources. The agency takes on the role of systems integrator and, using a premium hosting platform such as WP Engine can implement and manage automated updates and ongoing website performance monitoring. By helping the business to stay on top of important but mundane, often repetitive tasks such as updating plug ins and speed checks, the website and workforce performance is optimised.”
Alice Williams, Founder, Ovira
“Ovira’s growth wouldn’t be possible without outsourcing. When we first launched we kept everything in-house which slowed us down, because it’s hard to build out a high-performing department when you’re doing it for the first time. We decided to shift our thinking and keep our superpower, growth, in-house, and outsource everything else. Since doing so, we’ve been able to iterate and move faster because we can have a laser focus on growing Ovira with minimal distractions, knowing that what we’ve outsourced – everything from manufacturing and design to technology and finance – is sitting with experts in their field who can move a lot faster and execute much better than we could if we did it ourselves.”
Troy Sellers, Solution Architect APAC, Aiven
“Outsourcing technology is a well-proven strategy for companies to accelerate innovation and keep pace with the rapidly changing market conditions that they face today. Cloud providers are a great example of this; it is much more effective to have their expertise running the infrastructure than worrying about this yourself.
“Aiven allows businesses to take this one step further, removing the long-term commitment of hiring full-time specialists in specific open source projects, this outsourcing enables organisations to focus their budgets on the top talent they require the projects that focus on value for their customers.
“This is especially helpful for small businesses trying to remain competitive in today’s current markets.”
Paul Tory, Founder, Foodbomb
“Outsourcing is a contentious topic when it comes to business, but there can be benefits if it’s done right. Outsourcing provides you with access to a much broader pool of talent who usually come with extensive experience. Hospitality and food businesses for example can use outsourcing recruitment agencies to help secure staff or business experts like accountants/business advisors to help with operations. When done right, outsourcing certain aspects of the business can provide you with a competitive advantage, and give you access to resources you may otherwise not have had.”
Shaun Langdon, Managing Director in Bookkeeping, BlueRock
“Business owners didn’t start their business to focus on running the day-to-day support operations. The world of small business is changing, with new technologies, complex reporting, ATO crackdowns, and a tougher labour market, creating new challenges.
“Outsourcing is key to supporting business growth, as it provides the time, and the ability for business owners to focus on what is most important to them.
“Operational tasks such as payroll, bookkeeping, financial reporting, and support in people management are all services that can be easily outsourced. This not only removes time and stress from running a business, but it also reduces risks to business owners as it supports a high level of compliance. Working with an external team also provides opportunities to leverage leading technology to make processes more efficient and accurate, resulting in better decision-making.
“BlueRock recognised the importance of outsourcing these services, so created BlueRock on Demand, which is a flexible subscription model for payroll, bookkeeping, people support, and virtual CFO services. The way the model is structured allows clients to decide which services they require, and to operate on a monthly model. Therefore, as things change, packages can be upgraded or downgraded to meet the requirements of the business at any given time.”
Paul Soong, Regional Director, ANZ, e2open
“Outsourcing has its pros and cons for businesses in any industry, however choosing the right third-party to manage aspects of your business can solve a lot of problems, and often lead to great gains for the organisation.
“It’s inevitable that inside every business there will be certain aspects that are challenging to keep up with, or organise. Generally, a lot of time is wasted trying to patch up mistakes or get back on track to keep the machine moving along, leading to a waste of manpower, time, and money. These areas of the business can often cause a domino effect, impacting other parts of the business, leading to poor performance, and potentially a loss in revenue.
“Supply chain management, for example is a time-consuming process but it’s an important one, and one of the biggest pain points for businesses. Without the right technology, labour, and expertise, the hours spent on logistics operations can quickly add up. From raw materials becoming harder to get, to difficulty navigating foreign markets, increased costs, and so on, poor management and lack of supply chain visibility often lead to big hits on an organisation’s production, and reputation.
“In this case, partnering with companies that offer supply chain software with a connected network like e2open gives you complete end to end visibility over your organisation’s supply chain. It can also enable a business to better fulfill short supplier lead times, reduce inventory levels, and dramatically improve inventory turns, all while lowering costs, and letting your workers focus on what is important.”
Matt Richardson, Senior Corporate Foreign Exchange Dealer, OFX
“For businesses that operate globally – transferring funds between overseas teams, clients and suppliers – keeping across movements in exchange rates is pivotal to insulate profits, particularly with the current state of the AUD. However, there are never enough hours in a day and keeping a close eye on currency markets amidst competing business priorities is a challenge for many businesses.
“Outsourcing currency market monitoring and insights gathering to FX specialists could help ensure your business has planned for foreign exchange exposure, protecting it from the potential negative effects that market volatility can bring.
“As OFXperts, we help clients build a foundational understanding of currency volatility and how this could impact their business. Having a dedicated FX specialist offering real-time insights and assisting you in planning for forgein exchange exposure could give you time back in your day to focus on other business areas.
“Part of FX upskilling involves tapping into your existing network. As your needs grow, ask your business accountant or other financial experts for recommendations. Trusted guidance from FX specialists that can offer human support and a user-friendly platform can give you confidence that you have the right extended team behind your business to effectively engage in global trade.”
Craig Dangar, Senior Partner & Principal Consultant, Vault Group Accounting & Business Advisors
“Our practice moved heavily into outsourcing in 2019 and we haven’t looked back. Outsourcing is not for everyone, and much like all aspects of business requires heavy investment of both money and time to get it right. For small tasks now, especially around communications and design, we have found it easier to engage with an outsourced provider, rather than bringing the work in house.
“As a business strategy, a lot of roles and activities can be outsourced, but partnering with the right person or business is critical. We generally expect that a new outsourcing arrangement will take three to six months to get right, and that we need to surprise the work for that period. Understanding the value of outsourcing is critical, appreciating that the outsourced option will not be perfect on day one and will need an investment to make it work is often overlooked, and businesses need to analyse the actions that can be outsourced and plan for these for it to be successful.
“We believe that outsourcing is critical for small business (and large) as it diversifies the business and allows a business to adopt new systems, processes and outputs.”
Rolf Howard, Managing Partner, Owen Hodge Lawyers
“To keep costs under control and to expand the talent pool, many companies are turning to outsourcing both onshore and offshore. While this has several benefits, it’s important that companies are also aware of the risks.
“Most companies are aware that they will have less control over outsourced staff, so they will need to introduce processes to maintain work quality and timeliness. What many don’t think about, however, is that they may also be letting go of control of other important things like commercially sensitive company information, confidential data or customer data. Additionally, they may be inadvertently creating cyber security vulnerabilities. Without establishing the right protections, the company may be exposing itself to risk.
“It’s also important to be aware that outsourcing doesn’t necessarily preclude a company from the same obligations they owe in-house employees. There are several instances where a contractor may actually be considered an employee for tax or superannuation purposes. This is to prevent employers from unfairly employing people on a contract basis simply to avoid paying tax or superannuation. Check out the ATO’s Employee/Contractor Decision Tool to determine how your outsourced team members should be classified and what your obligations may be.”
Walter Scremin, CEO, Ontime Delivery Solutions
“Outsourcing is smart on several levels. Firstly, outsourcing has the potential to grow your business. You may be able to access extra resources at a competitive hourly/daily/weekly/monthly rate, to fuel growth without having to take on massive fixed costs.
“This is something we see in delivery transport a lot. For example, an auto parts business which wants to grow revenues by introducing a new delivery run: to do this in-house requires investing up-front in vehicles, personnel, insurance, and all the extras; yet by outsourcing, you can trial a new delivery run without breaking the bank, which could generate additional revenue. If it doesn’t work so well, you have the flexibility to shut it down easily.
“Secondly, outsourcing can potentially save you money, and improve your balance sheet by taking liabilities off your books.
“Finally, no business is good at everything, and by trying to do everything in-house you only create bigger headaches. There are certain business functions which are best left to specialists, so you can focus on what you do best.”
Jude Mahony, Director, Optimal Resourcing
“Outsourcing, offshore outsourcing or an option to outsource, should always be a consideration during strategic business planning. If you don’t include alternative resourcing solutions, you can affect business continuity and ultimately your bottom line. We’ve seen through the pandemic, how quickly the tide can turn and how workforces can be affected. Having support through an outsourced provider can be the difference between your ability to continue to deliver to your customers, or not. It can also affect your stress levels. Multiple forms of outsourcing are used in most organisations but aren’t recognised as outsourcing. Outsourcing is not just about services being done offshore, it’s also everyday services you need to run your business. Sub-contractors and suppliers are forms of outsourcing – imagine if you tried to run your business without them? Are you cleaning your own office, no? Then you’re outsourcing. It’s just good business.”
James Richardson, Co-Founder, Optimising
“Outsourcing can work in certain scenarios, but it should only come into play once solid processes are established in-house. When work can be boiled down to a step-by-step process it can often be successfully outsourced to an external provider, however, it can also reduce the level of control your business has over the work produced.
“At Optimising, we made the firm decision that outsourcing was not a good business strategy for us. For the clients we work with, their expectations, and the SEO work we’re performing, we determined we needed more control on the quality and type of output we were generating. Rather than outsource, our main priority is investing our time and resources into developing and hiring talent in house.”
Terri Martin, General Manager (East Coast), The Marketing Room
“In the current employment and economic climate, outsourcing makes sense for businesses who are committed to long-term growth. It frees up internal resources, and provides the agility to scale up and down as needed.
“Outsourcing is great as an option for bringing specialist knowledge into your business, at the time you need it most. For example our business provides outsourced marketing managers to businesses that want to tap into expertise, without paying for a large salary and committing to a permanent contract.
“When it comes to marketing, many start-ups and scale-up businesses are relying on their founders to lead the marketing charge, so outsourcing this function can give the peace of mind of knowing they’re putting proactive, strategic plans in place, rather than taking an ad-hoc, reactive approach.
“We predict outsourcing will grow in popularity – with more people wanting the flexibility of working part time or remotely, and businesses finding it hard to hire the right talent. Outsourcing can fill these gaps and take the headache out of recruitment.
“Challenging economic times are the ideal time to use outsourcing for your business as you weather the storm, without overstretching your internal team, or making permanent hires you can’t afford.”
Brianna Vidal, Director, Affinity Marketing
“Outsourcing can be a brilliant strategy to access specialist skills for your business without the additional cost and management of hiring those resources internally.
“When you outsource, you are able to tap into a resource who will often have many years of industry specific experience, and can provide an external view of your business that encompasses the competitor landscape and industry knowledge.
“Outsourced service providers should be regularly updating their knowledge with the latest insights and trends within their industry, so clients can benefit by gaining best practice information and applying that to their current business objectives.
“The caveat to outsourcing is however, that it’s imperative to be clear with your business objectives, goals and KPI’s to stay aligned with your outsourced resources – particularly if it involves strategic work. The brief should be well considered, with goals and success metrics clearly articulated so your outsourced partner can advise accordingly. The best outsourced relationships work where both parties consider it a partnership, with equal value to bring to achieve the best results.”
Sue Karzis, CEO, State Schools’ Relief
“For a not for profit with limited resources, outsourcing makes good business sense. At State Schools’ Relief, outsourcing is a regular part of our business operations, which lowers costs whilst providing the services and resources which we require.
“A great example of this is our outsourced HR function. With a small team of 22 employees, we don’t need a full-time employee and have a contractor who provides us with the support that we require, at a fraction of the cost. The advantage of this model is that support is always available, in comparison to a part time employee who may not be available on a day when that support is required.
“Another example of the benefits of outsourcing relates to IT. For the cost of one full time employee, we can attract a high calibre provider who can provide a much broader range of support, including cyber security and high-level IT architecture, rather than just day to day IT support.
“Buying in skills and capacity that you don’t have within your organisation can result in strong business impact. For example, when I wanted to raise the profile of SSR, I hired in PR skills to ensure that SSR was featuring in media stories and social media platforms. Realising that we would never have the resources or the skills and knowledge to perform these tasks and finding a provider to do this was one of the best decisions I have made. The outcomes were almost immediate, and resulted in increased funding and exposure.”
Felicity Zadro, Founder and Managing Director, Zadro and Zadro University
“Outsourcing can be a great business strategy when it’s done right, and the correct tasks are selected to be outsourced. It’s important to understand what skills you don’t have in your team and look to hire people externally who meet those gaps to create a complete picture of the skill set you require to fulfill your strategy.
“External parties can work best on tasks that require expertise and specific information. In the communications sector, this would often be your brand work, public relations, marketing campaigns, and creative. It is good to keep the day-to-day marketing and communications of your organisation in house.
“When you’re outsourcing always be super clear about what you’re asking them to do, define the strategy, and set clear KPIs to measure their success. It’s important not to move the goal posts during the project or assume knowledge of the outsourced supplier.
“The biggest risk with outsourcing is projects moving very quickly internally and the outsourced organisation being kept out of the loop. To combat this challenge set up regular meetings, create shared working documents, and check in regularly on success and milestones.
“Outsourcing is a fabulous way to get work done faster by people who have specific expertise in the area that you need to boost your organisation’s performance.”
Alexandra Stewart, CEO, Centre For Cancer Nutrition
“I’ve found outsourcing an absolutely invaluable tool in my business. I am skilled at many tasks but my time is better spent where my skills lie rather than learning new ones. Admittedly, it was difficult to let go and outsource to begin with but it was necessary for business growth. I outsource technical tasks as well as everyday tasks. Sometimes the remit is for a task from start to finish or I have someone finish or refine something I have already started. As a strategy to free up time to concentrate on working on my business rather than in it, outsourcing for me is sensible and a must.”
Martin Kelly, Director, Clayhall Solutions
“It can be, yes.
Non-core tasks are time consuming. Outsourcing enables businesses to concentrate on growing their core skills offerings, while aligning these skills to their customer value proposition (CVP).
“Other advantages include the option of outsourcing work to companies whose primary business function is not part of your business core offerings. For example, marketing or IT Support can be outsourced. For peace of mind, setting up a solid outsourcing agreement can protect your organisation from legal action. Outsourcing can be a cost effective alternative to hiring a staff member to manage these tasks.
“While outsourcing can deliver positive results, it isn’t entirely without risk. Planning and clear communication is required to mitigate these risks. Firstly, both parties should agree on the output quality standards. Do they align with the CVP? Secondly, plan how to address challenges, while assigning an internal contact to support the outsourcing party. Finally, good outsourcing requires trust and clear communication. Set achievable output expectations while respecting each company’s time and obligations.
“Committing to long-term, positive outsourcing relationships gives companies their time back, to focus on their core skills to fulfil customer needs that fit with the customer value proposition.”
Nick Kervin, CEO, Frisk
“The Frisk platform is centred around enabling smart decision-making that drives business effectiveness and efficiencies, so it makes sense that we aim to run that way too.
“With close to 50 staff, we run reasonably lean and work in an agile fashion, so outsourcing is a good lever for us to pull when needed. It allows the business to free up cash flow that would otherwise be tied into more permanent staffing, and quickly bring in subject matter experts where the business and our clients would benefit.
“The other side to outsourcing is that Frisk’s customers outsource their data analytics needs to us. With an extremely tight labour market for data engineers and scientists, we provide outsourced data insights services to many clients who can’t find or afford permanent staff.
“So yes, we see outsourcing as a good business strategy, but like most things, the ‘how’ is just as important as the ‘what’.”
Juliet Robinson, Leadership Specialist, Big Goals
“Outsourcing is a brilliant business strategy, as long as you are outsourcing the right things. I outsource all the things I’m not great at because it’s not a good use of my time. These include lots of transactional elements of the business, like social media posts and ads, copy writing, bookkeeping, travel arrangements, client contracts and invoicing.
“What I do keep control of is the strategy behind these. So we work out our marketing plan and map out the schedule for launches, webinar topics, weekly emails and social media. Then I am part of the editing chain once posts and emails are created. I rarely get involved in the images that go out with my social media now as we have been working together for so long now my VA knows what I want.
“I also keep control of anything client facing, including developing proposals and managing client relationships, because they want to work with me and it is my brand on the line. Outsourcing is incredibly liberating as it lets you focus on your zone of genius and not get stuck with tasks that suck your time and energy. Find the right people and start outsourcing today!”
Jason Hoeung, Founder of 2EROS and Supawear
“For most businesses, there is some repetition task. These repetitions are greatly useful for businesses to outsource as the processes are usually the same, and the outcomes can be easily automated. As the founder of 2EROS and SUPAWAR, an online men’s apparel store, there are a lot of customer-related tasks. General daily orders and customer enquiries to attend to, which can now be outsourced along with general enquiries and product information.
“We currently outsourced:
- Warehousing and Fulfilment with our 3PL partner
- Outsourced Virtual Assistant
- Reply to general enquiries
- Process and order updates
- Manage returns
- Manage review and social interactions and prepare orders for the warehouse to fulfil.
Why do we do this?
It allows our team to focus on the more important things that can’t be streamlined, like lost or delayed parcels and customer journeys, and we can improve their experience to elevate your brand value. Our products are amazing, and we want our online experience to reflect that. Allowing us to capture more time to plan, execute and elevate the experience. More time to plan, strategise & designing.
Cost-effective: Savings are redirected to other aspects of the business or can re-invest in higher-level recruitment.”
Jacqueline Cripps, Management Consultant and Author, Jacqueline Cripps Limited
“I think the question isn’t so much about whether outsourcing is a good business strategy, but a required business strategy. With the growth in the gig economy, trends such as the Great Resignation, and ongoing challenges with retention and requirement of quality talent, businesses may find themselves facing outsourcing as the only option. That aside, outsourcing should be seen as viable option for business. This approach brings benefits: external perspective, subjective matter expertise, reduction in costs relating to staff recruitment, access to talent pools that might not have been considered, appeal to millennials who have (and want) diversified portfolios, and (economic) contribution vis-à-vis the investment in the service provider.”
Andrew Woodward, Founder, The Investor’s Way
“When considering outsourcing as a strategy for your business, the simple decision point is based on the type of business you want to have.
“If you want a million-dollar business, as the founder or owner, you need to be doing the things that will generate you revenue, and not the things that are more administrative or operational.
“If you can outsource a task for $10-20 per hour while you complete tasks that will help you build your million-dollar business, than outsourcing is absolutely the right way to build your business.
“To have the business you want, first you need to operate in the way that you would with that business, which simply means you can’t be doing $20 per hour activities if you want to generate $500 per hour on your time. It’s the opposite of how most business owners operate!”
Marie Temby, Business and Life Coach, Simple Soulful Successful
“Outsourcing has its place in business, however there are certain right and wrong reasons to use this practise. Here are three of each:
- When you have a goal you want to achieve by a certain time and your current team cannot do the work to make it happen.
- When it is critical to have a certain skill that you don’t currently have in your business.
- When you need to control your costs, sometimes outsourcing is a much cheaper option.
- When you have a member on your team who has the same ability and time to do the same job, it can cause you staffing issues if this is the case.
- Simply to cut costs, although this is an option at times, it should not be the sole reason as it may end up costing you more overall.
- Thinking your customers will receive a better customer experience, inhouse customer experience is always best when handled internally.”
Andy Reid, Director, Apollo Auctions Victoria
“Providing that there is strong logical support to substantiate such a move, outsourcing can be absolutely brilliant for any business, at any level. There are a few key parameters though that must be taken into consideration before outsourcing parts of your business:
- How’re your current time/financial efficiencies? Making sure that current processes are tight & lean is tremendously important before outsourcing any of it. If you have large gaps in your diary, but you get to the end of the day feeling ‘busy’, then chances are you have been busy getting very little done, & outsourcing when this is the case is simply a waste of money when you do have the time to get stuff.
- What are the roles within your business? – Whether you are a sole trader or have a team around you, it’s a really good idea to have a diagram of the different sections of your business set out with the tasks that are undertaken within each section. That way you can see more clearly the things that are getting done, and to what level.
- What do you ENJOY doing? – This (for me) is the most important part of the whole topic. I get that we may be more valuable to the business in a certain function, but if it’s our business…then why can’t you keep the tasks that you enjoy on your desk?! Likewise, which ones do you absolutely detest?
Cost analysis – Of course this is imperative, however, if you’re in a service industry of some sort, then you will need to ascertain/calculate your average pay per hour as opposed to looking at commission cheques. From there it’s a fairly simple equation – if your $$ per hour is worth more than that of the task you want to offload…then you know what you need to do!”