Outsourcing – in some circles it is considered to be a heavy word and often plagued by negative connotation. But it shouldn’t be. Outsourcing should be an open topic and a frequently considered business opportunity, available to companies of all sizes.
Outsourcing is not a new idea, but it’s something that isn’t talked about enough given the fact that almost every large company you can think of does it. One of the driving factors is that the outsourcing industry is typically only available to larger entities. In order to hire a firm in the Philippines, you usually must be able to commit to at least 50-100 monthly employees, working a full 40-hour week. That leaves out the rest of the companies that only need a few people for customer service, data management, content moderation, social media expertise, etc.
While there are a myriad of benefits that I will get into, I want to first touch on why we need to start a conversation about outsourcing. Outsourcing can be an incredible competitive advantage for companies. But as already mentioned, this advantage is typically not in reach for smaller teams. Given this, how are startups expected to scale and compete with the industry captains that DO outsource and maintain operations costs that are up to 90% lower. This cost break leaves a massive expense deficit that these companies spend on marketing, strategy, customer perks, [you name it].
Outsourcing is a practice that every business should consider.
What are the benefits of outsourcing?
- Outsourced teams can be up to 90% lower in pure hourly cost
- Outsourced teams are not subject to the federal and state labor laws and taxes. On average, these result in an increased bottom-line cost for each employee of 16%. This is true for:
- Social security tax
- Health care
- Paid holiday and sick days
- Workers Comp
- Employment tax
- Overtime pay
- Outsourced teams provide easier scheduling and are available 24 hours 7 days a week
- The workers are highly specialized in specific tasks and often more motivated to learn, grow, and excel
- Outsourced teams are easily scalable due to low turnover cost and specialized tasks with strong training process
- Outsourcing allows your internal team to spend more time on core responsibilities
- Outsourcing allows you to free cash for growth objectives instead
And there is more. You can read up on different perspectives on the benefits of outsourcing here:
What type of work can you outsource?
You’re probably thinking okay, those benefits are enticing, what can outsourced teams really do though? To start, there are some general areas listed below. But honestly, get creative. OpsTales is helping with some pretty specific tasks, like weekly reporting on cashier voids to detect cashier fraud, managing back-office inventory levels for retail stores, and doing variance reporting on ATM machine withdraws. There is really no limit, if you can outline a step-by-step process, it can be outsourced:
- Customer service
- Merchant relations and management
- Data entry
- Content review
- Fraud prevention
- Manual review and chargeback responses
- Social media management
- Marketing & Market Research
- Virtual or executive Assistant
From a high-level, outsourcing sounds like a great opportunity. Especially for startups and small businesses. However, there are still questions we haven’t answered yet: How do I communicate with and manage a remote team? How do I hire people? How do I assure quality overtime? How can I be sure my data is safe? How can I the error rate low?
How can you get started?
It all starts with identifying what can be outsourced. The better your on-boarding process and day-to-day operations are outlined, the easier it will be to get started. I would recommend to first look at your departments from a financial perspective. What is costing you the most but doesn’t necessarily need to be done in house? Dig into where you team spends their time and categorize the work into buckets. You want to differentiate between tasks that are:
- essential core responsibilities for your team
- essential but process oriented or repetitive tasks
- non essential tasks
If you find any tasks that classify as non essential, you should stop performing them. The essential but process oriented or repetitive tasks are ideal candidates for outsourcing.
In accounting you will often find tasks that boil down to data entry. Outsourcing them can be a huge cost saver. Customer support is also great candidate. Not just due to the cost of support agents. By outsourcing, you can have agents working 24/7, dramatically reduce response times and make customers even happier.
Hiring outsourced teams
There are a two main options for hiring. You can either hire individuals and build your own team or work with an agency. Agencies can help you in different ways. For example with finding candidates, managing remote employees, designing processes and more. You should consider the weight of hiring and manage your own team vs letting an agency do the hard work. While building your own team might look like a cheaper solution, it comes with a lot of overhead and requires quite some expertise.
Which way to go ultimately depends on what you need as a company and how structured your business processes are. If you already have strong processes in place and know how to effectively train and mange a remote team, there are tons of options out there. Options range from platforms like Upwork over hiring individuals from Craigslist to working with agency.
If you’d like to outsource, but don’t necessarily have the right process in place, hire an agency or consultant. They can help you to identify good targets for outsourcing and set up your processes accordingly.
Managing an outsourced team
This is a big topic that requires an article of its own. To get you started, here are the key points. You must have very clearly outlined processes, ongoing management, strong communication, performance metrics, and you must pay attention to the cultural differences.
Managing a team, let alone a remote team, is a specialized skill. While you can outsource many positions, you should have an experienced person manage the team. The best options are to either hire an agency that can manage the process or work with a consultant to learn how to do it yourself.
How can I be sure that the quality will be maintained?
As with any team, the responsibility falls on management. You need to monitor and manage to ensure that the quality is top notch. It is highly effective to define KPIs for quality and monitor for fluctuations. This could be daily emails answered, processed items, time spend per task, etc. If you see signs a downward trend in those KPIs, take action. You need to be proactive in managing and training the team. Make sure they have all the tools and systems they need and are happy at work.
How can I be sure that my data is safe?
Being new to outsourcing, you might be scared to give people access to your data. You might be worried because you don’t know who will access the data, where it will be accessed from, how it is used and if a person on the remote team is trustworthy. You might also be concerned about who has access to the facility where the remote team works. All those concerns are valid. But keeping data safe is always challenging and concerns for local vs remote teams are the same. Outsourcing or not, it’s generally a good approach to limit and monitor access to risky data. It’s also good practice to monitor login info such as IP address and new devices.
Ultimately, you need to build trust, ensure a good process and make sure that you have the information you need to feel safe.With proper management and by giving your remote team a chance to grow you can ensure their happiness. By building a personal and long lasting relationship with your remote team you will gain trust over time.
Outsourcing has a myriad of benefits and can make a huge impact in your ability to grow as a business. There are a lot of factors to consider and you should make sure to be diligent and thoughtful in setting this up. Ask for help from consultants and do your research, no matter which way you go.
If you want to outsource, but don’t know where to start or don’t want to invest the time, reach out to us at OpsTales. Our goal is to make outsourcing accessible for smaller companies and startups, enabling them to be more competitive in their fields. We’ll help you isolate what can be outsourced, design new processes, and build and manage a new team for you.