Is outsourcing the answer? Here’s what you need to know
Jan. 26, 2023
This paid piece is sponsored by Eide Bailly LLP.
A version of this article first appeared on EideBailly.com.
More and more Sioux Falls-area business owners and nonprofit organizations are employing outsourced services so they can work on their business, not in their business.
In the past five years, Eide Bailly has seen a substantial increase in the number of companies in this region utilizing outsourced services, from CFO to payroll and human resources. Many organizations do not have the expertise in-house and may not need a full-time employee to get the advice and expertise they need.
Business owners are recognizing the need to implement cutting-edge technology, maintain accurate financial records and utilize effective security measures to drive growth and protect their organization’s assets. However, achieving these goals requires specialized knowledge, industry expertise and strategic foresight, which may be difficult for internal staff alone to provide. As a result, many organizations turn to outsourcing to complement their internal team’s skills and knowledge, allowing them to expand their strategic thinking and achieve their objectives.
What is outsourcing?
Outsourcing is simply the process of hiring an external company or individual to perform a specific task or service for your organization. This can include areas such as accounting, technology, cybersecurity, data, human resources and more. Often, organizations outsource to bring in needed expertise or an extra set of hands where they cannot yet bring someone on full time to serve as a CFO, CIO, CSO, etc.
Keep in mind that outsourcing is not intended to replace the core functions of a business but rather to supplement them. By outsourcing certain noncore tasks or services, a business can free up resources and focus on long-term strategic planning. Outsourcing also allows a business to access specialized expertise and technology that may not be available internally, thereby improving the overall quality of the services provided.
Reasons why your organization should consider outsourcing
There are several reasons why an organization may consider outsourcing:
- Cost savings
You may not have the budget to hire in-house the accounting, payroll, technology or IT personnel your organization requires. Outsourcing certain tasks or functions can be more cost-effective than hiring and maintaining internal staff. This is because outsourcing companies often have economies of scale and specialized expertise that allow them to perform the task or function more efficiently.
- Increased efficiency
By allowing your organization to focus on its core competencies and delegate noncore tasks to specialized professionals, outsourcing can be an efficient solution for companies of all sizes. Additionally, outsourcing can provide your organization with greater flexibility in terms of scaling operations up or down as needed. This can help your company better manage its costs and resources, and respond quickly to changing marketing conditions.
- Access to specialized expertise
As a business owner, you may not have the time or resources to make sense of business data in a useful, meaningful way. And, you shouldn’t have to. Outsourcing can provide an organization with access to specialized expertise and technology that may not be available internally. This can help improve the overall quality of the services provided and lead your organization toward greater success.
- Risk management
Does your organization lack policies, procedures and risk mitigation strategies to keep you, your assets and your customers safe and secure? Especially if your organization operates in a highly regulated industry, it may be useful to outsource certain compliance-related tasks, such as regulatory compliance or data privacy, to a specialized provider with expertise in this area.
- Ability to focus on business growth
If your business is growing rapidly, you may need additional resources and assistance to help you move forward. You want to free yourself from running the day-to-day operations of your company and instead focus on driving long-term strategic initiatives. Outsourcing noncore activities allows an organization to focus on its core business and improve its competitiveness.
Things to consider before outsourcing
While outsourcing may be a beneficial solution for your organization, you will want to consider the following before making any decisions:
- What does your team spend the most time on?
This exercise provides insight into how you or your employees are spending time. Are there certain tasks that might be better off as an outsourced service so time is spent more wisely? Identifying inefficiencies will lead to options for streamlining performance.
- Does outsourcing make sense financially?
While outsourcing is generally considered a cost-saving opportunity because you’re not hiring a full-time employee and paying for benefits or onboarding, it’s wise to take a close look at expenses and profits before making this financial decision.
- Are you aligning with company values?
Since outsourcing includes working with a third-party provider, it is important to ensure the outsourced work can be done in a way that is consistent with your organization’s overall mission and goals. For example, if customer service is a value that your company prides itself on, you should choose a provider who will work to maintain and possibly even improve the standards of customer service your company is known for.
The future of outsourcing
Recent global events have made companies hyperaware of remote-working options and the need for advances in technology. It also has solidified the beneficial relationship between service providers and companies. While organizations will continue to invest more in developing in-house capabilities, research also shows that a majority of companies will continue to outsource tasks far into the future. By analyzing the needs and goals of your organization, you will be able to strategically determine if outsourcing is the best solution for continued growth and success.
Contact Kristen Boyle for information.
