Outsourcing

Advantages of Outsourcing

Outsourcing has a bad reputation in some circles, with many associating it with job losses to foreign countries. The reality is that there's much more to outsourcing than that -- and for small business owners, outsourcing could be a smart business move.

Faced with stiffer competition and declining profit margins, more and more U.S. companies are turning to small business outsourcing as a way to meet their labor requirements and salvage their bottom line.

But does outsourcing deliver any real advantages to small businesses?

Sure it does. But to get the biggest return on your investment, you'll need to understand what those advantages are and how they translate into actual benefits for small businesses in your industry.

• Staff focus. On the whole, the kinds of jobs that are outsourced are ones that are peripheral to the company's primary mission. When small businesses find themselves inundated with peripheral tasks and distractions, they often use outsourcing as a way to refocus their internal labor resources on core business functions.
• Reduced labor overhead. When you hire a new employee, you are signing on for an open-ended business relationship and an ongoing labor expense. Even though outsourcing contracts involve a significant period of time, you'll know upfront how long you are committed to the relationship and how much it's going to cost your company.
• Flexibility. Steady, consistent workflows are simply not a reality for many small businesses. Outsourcing service providers give you the flexibility you need to accommodate cyclical workflows and seasonal labor demands.
• Operational continuity. Layoffs and staff reductions can have a dramatic impact on your employees and your company's standard work routines. Process outsourcing minimizes the disruption during transition periods and makes it easier for remaining workers to see that company operations will continue despite recent changes.
• Employee motivation. Let's be honest . . . when your employees see that you are willing to outsource certain job functions, they become more motivated to perform and demonstrate their value to the company. It's also not uncommon for small businesses to use outsourcing providers as a catalyst for change in a specific department or division.
• Cost efficiency. Cost savings is the main reason most small business owners explore business outsourcing. Outsourced labor may or may not involve a higher hourly rate, but it avoids the requirements of benefits and salaries.

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