Outsourcing for expertise works. For an owner or key executive, running a business can be like a never-ending game of, “Whack a Mole”. No matter how fast and how many things you knock out, new things just keep popping up. How does one get ahead of the game? Outsource non-vital functions.
Outsourcing accomplishes more than shifting some work out of a business. It does do that, AND so much more. It dramatically increases access to expertise. Outsourcing provides access to a vast world of knowledge from experts in a myriad of fields. Outsourcing can be one of the most powerful and cost effective business tools in an executive’s tool shed.
Here is an example. Very few businesses can afford to have in-house counsel. If they do, the areas of expertise are usually concentrated in one or two areas. Yet operating a business requires legal expertise in multiple areas like real estate, employment, industry specific issues and business contracts. It doesn’t make sense to hire all these “experts” in-house, so a business owner outsources to a law firm.
Now apply this concept to Human Resource Administration, Risk Management, and Benefit Administration. It is often said that a company’s most important asset is their employees. Yet they provide their employees with a handbook that they cut and paste together from an employment manual someone used at another company. They put their heads in the sand knowing that it might not meet current labor laws and standards. This can create heartburn at best and real exposure at worst. They buy payroll software and try to learn how to use it. They fill out the 940 and 941 tax forms, praying that they did it correctly. They shop for group health insurance. They try to find the most cost effective way to start a 401(k) program. They fight unemployment claims, handle wage verifications and do e-verify. Who does all this work? Often, it’s an administrative employee who has attended an HR seminar. Can that work? It can, but it’s certainly not an efficient or effective use of resources. Better yet, how do these tasks help create revenue or help the bottom line? They don’t.
“Outsourcing increases a company’s internal capacity for production, service and quality.”
Most companies have about three things that really matter – the “essential objectives”. The best companies in every market sector find these three things and perfect them. They focus on the fundamentals that drive revenue and profit and they hone them to perfection. That is what separates them from their competitors. If a business function doesn’t directly impact the “essential objectives”, it should be outsourced. HR administration is a perfect example of this – so outsource it.
Outsourcing increases a company’s internal capacity for production, service and quality, thereby increasing a company’s ability to make a profit. Every business has its specialty. That specialty is provided to customers for a price. The outsource company has its specialty too. It is staffed with people who have depth of knowledge in their respective specialties. It’s what they do. Is it free? Of course not. Is it a good deal? Absolutely – it’s worth every penny. If you choose the right company, the start-up costs will be minimal and it will be easy to leave if you don’t like the service.