Outsourcing business services

Outsourcing business services: Three key factors to consider

by Sean Tilbrook

 

 

“When does it make sense to outsource a business service?” This is a question I get asked a lot, and unfortunately there’s no simple answer. It very much depends on the nature of your business, the type of service and the factors influencing the potential change. For me there’s three considerations:

 

Consider the costs

Let’s face it; if you’re considering outsourcing a business function, the biggest factor influencing your thinking is probably to reduce costs. The cost of running a business in WA is higher than any other state. That’s not news for any of us over here, however according to a recent study by Curtin University, costs such as wages and office rents in WA continue to increase ahead of the national average despite the recent downturn in our economy. Add to that the impact if you’re servicing regional WA and you have an even stronger incentive to look for savings.

Outsourcing will provide top-line savings but don’t let the need for short-term cost reduction overly influence your decision. Any outsource contract should be a long-term proposition. Give yourself enough time for the project: To ensure the best outcome, factor in enough time and budget for knowledge transfer, service transition and implementation.

 

Consider your core business

Outsourcing is best suited to non-core business functions. My business, for example, typically involves extensive customer-facing interaction. My clients expect great customer service and I consider it part of my core business offering. So I’ll maintain direct control over any functions that can impact our service levels. Over the years we’ve also built a lot of IP within the business that differentiates PrintSync from its competitors so I’ll also keep that in-house to maximise my competitive advantage.

Beyond those considerations my opinion is that everything else is on the table. If you’ve not been through this process before, why not start with something small. We provide video conferencing and boardroom services and whilst they’re not the biggest expense you have, the feedback I get from business owners is that they don’t want expensive employees running around searching for cables and connectors before an important customer presentation. They should be able to walk in and have everything working so they can focus on providing a professional first impression. It’s the same with printing; customers want the outcome. They don’t want to buy the printers; they just want the prints.

 

Consider the contract

The contract is very important, however the partner you choose to contract with is even more so. In my experience, once the signed contract is pulled out and waived around, the relationship often ends in tears. So you need to be 100% confident working with your selected partner. It’s about you having the trust in their capability to deliver and support what’s been promised. In WA this is even more important; and that’s why I have built an extensive regional branch footprint backed up by a national support network.

With any good outsourced project, the individuals delivering those services become part of your business. Maximise the benefits by fully integrating them into the business over time; for example, invite them to take part in team events. Limit the potential for them to be seen as outsiders by providing normal employee access to buildings and IT where appropriate. The more they interact with your employees the more they become personally invested in your company culture and its success.

 

Final thoughts

According to Deloitte’s 2014 Global Outsourcing and Insourcing Survey (2014 and Beyond), the recent expansion of outsourced services is expected the continue. “Beyond 2014, technology will reduce geographical barriers encouraging companies to constantly reassess their service delivery options.” However, outsourcing is not some new age practice. In fact, Henry Ford is credited with words to the effect “If there was a thing that we couldn’t do more efficiently, cheaper or better than the competition, there is no point in doing it further – we should hire the one who does it better than we do.” This sentiment still makes perfect sense even today.