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The benefits of outsourcing business processes

Outsourcing has been a popular business strategy for the last four decades. Beginning in the 1980s, businesses began to use outsourcing to handle certain key functions within their business.

Here are some of the main benefits of outsourcing critical business processes that have made it such a popular strategy.

Focus on your core business process

The most important benefit of outsourcing critical business processes is that it frees up your time and resources to focus on your business’s strongest aspects. If you’re a marketing agency, for example, you’ll want to dedicate most of your time to developing and executing marketing campaigns for your clients.

In any business, there will inevitably be some essential tasks and processes that don’t play to your strengths. Instead of wasting valuable resources on administrative or non-essential tasks, you can operate much more efficiently by outsourcing these to another business.

Reduce your labour costs and overheads

Hiring and training staff is expensive, especially when you only require them on a short-term basis. Temporary employees will never have the same motivation to do their best work that a full-time employee will have; they are rarely worth what they cost.

By outsourcing, you can convert these fixed labour costs into variable costs. In other words, you will only have to pay for the services you require. Meanwhile, the business you outsource from will take on the costs of training workers and providing the necessary equipment.

If there are any areas of your operations that fluctuate throughout the year, outsourcing enables you to take on additional resources when required and then release them after.

Control your cash flow

Converting fixed costs to variable costs will free up more of your cash flow to invest in other parts of your business. Whether that means investing more in product development or beefing up your marketing campaigns, outsourcing gives you additional room to manoeuvre with your finances.

Outsourcing also enables you to take advantage of the latest technology and equipment without having to shoulder the costs of purchasing it outright. For example, outsourcing to a design studio can save you the costs of purchasing your own photography equipment or editing software.

Gain access to industry specialists

Hiring new team members with specialised skills and knowledge often comes at a high cost. Not only do you have to pay them a rate that correlates with their specialty, but you will also need to teach them your internal processes and workflows. In some cases, you will even have to develop new processes just for them.

Outsourcing enables you to access experience and expertise that would be prohibitively expensive to bring in-house. Outsourcers take on the costs of keeping up with the latest industry trends and will constantly train their staff in the latest skills and techniques in their field.

Managed risk

Whenever a worker quits, they take all the time and money you have invested in them with them. Not only this but having key workers quitting at the wrong time can cause serious problems for your business operations, depriving you of critical skills when you need them the most.

Outsourcing enables you to maintain a degree of consistency. Instead of scrambling to fill a vacancy in your business, outsourcing ensures your operations can continue smoothly.

What should you outsource?

Not every part of a business is suitable for outsourcing. However, there are now more outsourcing possibilities than ever before. The best outsourcing targets will depend on your individual businesses and the challenges you find yourself struggling with regularly.

The most fruitful outsourcing targets will be areas requiring specialist knowledge or tools and removed from your core competencies. Common targets include:

  • Tax services
  • Legal services
  • Accountancy function
  • Digital marketing and lead generation
  • and more

Any aspect of managing your business that you aren’t confident in are potential targets for outsourcing. For the reasons we have outlined above, outsourcing can benefit a business in a variety of ways. It is something that every business should consider.

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