In basic terms, outsourcing means engaging an external company to deliver services on your behalf, managed through a service level agreement. This can apply to a full range of services from cleaning and catering to professional services such as financial control and HR. Reasons for outsourcing can be financial or time-driven, but often the biggest gains are through access to specialist expertise and experience which can plug crucial skills gaps in an organisation.
Outsourcing is a huge market [1] but it’s not only large businesses which can benefit from external expertise. In fact, SMEs stand the most to gain from outsourcing particular aspects of their business, allowing them to tap into specialist expertise at the right time to help drive their business forward.
In recent years there has been significant growth in outsourcing of professional services as businesses look to specialist advisers to provide the expertise required to grow their business. HR continues to be the most commonly outsourced service in the UK, while finance, IT and business processing also have a large share of the outsourcing pie.
These support services may not be at the sexy end of what your organisation does, but they are crucial to its success. Indeed, failing in these areas can literally break your business. But outsourcing is not a sure-fire quick win. Understanding what your organisation needs and providing the people and/or solution which best fits those needs requires careful attention.
Knowing whether outsourcing is right for your business starts with an honest appraisal of skills gaps within your organisation in relation to your business plan. Do you have the skills, expertise and capacity to manage your business and deliver your growth objectives over the next two, five or ten years? Where are the gaps?
This assessment provides the starting point for a clear brief which is the foundation on which any successful outsourced service will be built. It is not uncommon, though, for organisations to find this first phase challenging. In fact, we often find the first stage of a new project will be focused on helping clients define their needs including how to maximise the impact of our involvement.
An effective use of outsourcing can not only improve business efficiency, it is increasingly seen as an essential part of successfully growing a business. While businesses choose to outsource for a wide range of reasons, the following key benefits apply to all organisations:
Naturally, these benefits interrelate and work together to provide ambitious SMEs the flexibility and expertise to put them on a more equal footing with larger businesses. But whatever the expertise you’re buying in, you will only reap the rewards if you invest time in finding the right partner for your business. From our experience as a provider of outsourced services ourselves, and having worked alongside other specialist providers, cultural fit is as important as expertise.
The more you put in to making the right choice at the outset, the greater the rewards. Do your research and talk to different providers. What makes their approach different? Does their style fit your organisation? Are they prepared to get stuck in at a practical level as well as providing strategic input – are they doers as well as thinkers?
Everyone will have their own requirements and there are different ways of delivering outsourced services. Our approach, for example, has always been to work as an extension of our clients’ team, combining working at their office with supporting them on the phone and email, so that a perceived part-time resource is, in practice a full-time service when it is needed. Put another way, while most clients don’t require a full time person or team, they do require anytime access to specialist advice.
Establishing your requirements at the outset and drawing up a clear service level agreement will help ensure everyone understands the expected output and outcomes. Regardless of how closely you may work with your outsourced specialists day-to-day, formal review meetings to monitor progress and discuss any issues will keep work on track and enable both parties to iron out any barriers affecting progress.
To survive in an increasingly competitive market, SMEs need to be among the best in their particular sector. Having a great product or unique selling point is not enough – to capitalise on opportunities and withstand a tough financial climate, businesses need to operate efficiently and cost effectively. The right approach to outsourcing enables you to combine the best internal and external expertise to build a leading team which secures future growth.
For an informal chat about how Playfair Partnerships can help you maximise your business potential, please get in touch.
[1] Outsourced contracts were valued at £5.67 billion in 2015 – Avarto Bertelsmann: Outsourcing Index – 2015 Full Year Review
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