Business functions you can outsource for leaner operations

Ever feel like there’s too much to do and not enough time? You’re not alone. Many businesses are turning to business process outsourcing, or BPO, to help out.

This means they hire other companies to take care of certain jobs, like human resources or sales, so they can focus on what they’re really good at. This is a big help for small businesses that are trying to grow but don’t have a lot of extra money to spend.

In this article, we’ll talk about what kinds of jobs you can outsource, why it’s a smart move for small businesses, and how it can give you an edge over the competition.

Human resources

Human resources (HR) is often mistakenly thought of as merely a hiring department. In reality, HR encompasses a broad range of business functions, from talent management and employee relations to benefits administration and compliance.

Given its multifaceted nature, HR can consume a significant amount of time and resources, making it a prime candidate for business process outsourcing.

Key HR functions to outsource

• Payroll processing:
  • Outsourcing payroll can save time and ensure compliance with tax laws.
  • Specialized service providers handle tax calculations, benefits deductions, and more.
• Benefits administration:
  • This includes healthcare, retirement plans, and employee wellness programs.
  • An outsourced provider can manage these efficiently, especially beneficial for small businesses.
• Talent acquisition and management:
  • Recruitment is more than just interviews; it’s about sourcing the right talent.
  • Outsourced HR services can also manage employee engagement and performance reviews.
• Employee relations and legal compliance:
  • Handling grievances and ensuring legal compliance are complex tasks.
  • Outsourcing these functions can reduce the risk of costly legal issues.

Financial and strategic advantages

• Operational costs:
  • Outsourcing can lead to significant savings, giving small businesses a competitive advantage.
• Strategic focus:
  • Your in-house team can focus on core business activities, aligning HR with your overall business strategy.

When NOT to outsource HR

While outsourcing HR can offer benefits like cost savings and efficiency, there are scenarios where keeping HR in-house is more advantageous.

You should not outsource HR when:

1. Company culture is a priority: If maintaining a unique company culture is crucial for your business, keeping HR in-house can be essential for fostering that environment.
2. Sensitive information is involved: If your HR functions handle highly confidential or sensitive data, it might be risky to entrust this to an external provider.
3. Quality control is a concern: If you have specific quality standards that are difficult to monitor externally, it’s better to keep HR functions in-house.
4. Costs outweigh benefits: Sometimes the financial aspect of outsourcing doesn’t make sense, especially if the service provider’s fees are too high for the value they offer.
5. Legal constraints: Certain industries have strict regulations about what can be outsourced, making it impractical or illegal to outsource HR functions.
6. Loss of managerial control: If you want to maintain close oversight and control over HR functions, outsourcing may not be the best option.
7. Short-term needs: For temporary or short-term HR needs, hiring an external provider might be an overcommitment.
8. Complexity of transition: If the process of transitioning to an outsourced provider is too complex or disruptive, it may be more practical to keep HR in-house.
9. Negative employee perception: If your employees are likely to view outsourcing as a threat to their job security, it may be best to keep HR functions in-house to maintain morale.
10. Strategic alignment: If your HR functions are deeply integrated with your core business strategy, outsourcing could dilute that alignment.

In these scenarios, keeping your HR functions in-house may align more closely with your business objectives and operational needs.

Sales and marketing teams

Outsourcing companies specializing in sales and marketing can offer a competitive advantage. They bring expertise in search engine optimization (SEO), social media marketing, and even full-scale sales operations, often at a lower operational cost.

Roles to outsource

• SEO: Specialized agencies can elevate your website’s search engine ranking.
• Social media marketing: Expert teams can manage your social media platforms.
• Content creation: External services can produce high-quality content.
• Email marketing: Outsourced teams can handle your email campaigns.
• Customer relationship management (CRM): Specialized services can manage customer data and interactions.

Potential disadvantages

1. Loss of control: Outsourcing may result in less direct oversight over your brand’s messaging.
2. Quality concerns: The service quality may not meet your standards.
3. Hidden costs: Additional fees might arise for services not covered in the initial agreement.

Information technology teams

Information technology services are another area where businesses outsource extensively. An outsourcing partner can provide specialized skills in server maintenance, software development, and more.

Roles to outsource

• Server maintenance: Specialized services can manage server upkeep.
• Software development: Custom solutions can be developed by expert teams.
• Cybersecurity: Specialized firms can protect your data and network.
• Data analysis: Outsourced data analytics can provide valuable business insights.
• Tech support: Outsourced call centers can offer 24/7 customer support.

Potential disadvantages

1. Security risks: Outsourcing can expose your data to third-party risks.
2. Communication barriers: Offshore teams may present language and time zone challenges.
3. Dependence on the service provider: Over-reliance can be risky if the provider fails to deliver.

Financial planning and legal services

Financial planning and legal services are often overlooked but are crucial business processes. Outsourcing these functions to experts can save you from costly mistakes in tax planning, compliance, and contract drafting.

Roles to outsource

• Tax planning: Specialized firms can optimize your tax strategy.
• Compliance management: Outsourcing can help you stay compliant with laws and regulations.
• Contract drafting: Legal experts can ensure your contracts are sound.
• Financial auditing: Get an unbiased review of your financial statements.
• Risk assessment: Identify potential financial risks and develop mitigation strategies.

Potential disadvantages

1. Confidentiality risks: Sensitive financial and legal data could be exposed.
2. Cost overruns: Specialized services can be expensive and exceed budget expectations.
3. Quality variance: The level of expertise may vary among service providers.

Manufacturing and supply chain

Outsourcing manufacturing is a well-established business practice, especially for businesses looking to reduce operational costs. Outsourcing offshore, where labor costs are lower, is a common business strategy.

Roles to outsource

• Product manufacturing: Outsourcing can reduce labor costs.
• Quality control: Specialized firms can ensure product quality.
• Logistics: Outsourcing can streamline your supply chain.
• Inventory management: Specialized software can manage stock levels.
• Supplier management: Expert teams can handle supplier negotiations and relationships.

Potential disadvantages

1. Supply chain risks: Over-reliance on external providers can lead to disruptions.
2. Quality inconsistencies: Outsourcing may result in variable product quality.
3. Loss of proprietary knowledge: Outsourcing can risk exposing trade secrets.

Virtual assistants: the small business solution

Virtual assistants are becoming increasingly popular, especially among small businesses. They can handle a variety of tasks, from administrative duties to customer service, without the commitment of a full-time employee.

Roles to outsource

• Administrative tasks: Virtual assistants can handle scheduling and data entry.
• Customer service: They can manage customer inquiries and complaints.
• Social media management: Virtual assistants can manage your social media platforms.
• Market research: They can gather data on competitors and industry trends.
• Content management: Virtual assistants can update and manage website content.

Potential disadvantages

1. Limited control: Virtual assistants work remotely, which can limit direct oversight.
2. Confidentiality concerns: They often have access to sensitive company information.
3. Skill limitations: Virtual assistants may not have specialized skills for certain tasks.

The competitive advantage of outsourcing

Outsourcing has long been viewed as a way to cut operational costs, but its benefits extend far beyond that. When done right, outsourcing becomes a strategic tool that can provide a significant competitive advantage. It allows you to focus on your core business activities, whether that’s product development, customer service, or market expansion.

Agility and responsiveness: The hidden benefits

• Agility: Outsourcing non-core functions enables your in-house team to be more agile. You can quickly adapt to market changes, pivot your business strategy, or even enter new markets with minimal friction.
• Responsiveness: With fewer business processes to manage in-house, you can respond more quickly to customer needs and market trends. This level of responsiveness can be a game-changer in competitive markets.

The edge over competitors

Businesses that try to manage all business processes in-house often find themselves bogged down with administrative tasks, leaving less time for strategic planning and execution.

Big and small businesses outsource processes to free up valuable time and resources, giving them an edge over competitors who are still trying to juggle everything internally.

Small businesses and outsourcing

Small businesses often operate with limited resources and manpower. Outsourcing services like information technology services, legal services, or even sales and marketing can level the playing field, allowing small businesses to compete with larger, more established companies.

Aligning outsourcing with business strategy

The key to gaining a competitive advantage through outsourcing is to align it closely with your overall business strategy. This involves:

• Identifying which business functions are core to your value proposition and which can be outsourced.
• Choosing the right outsourcing company or outsourced provider who understands your industry and can deliver high-quality services.
• Continuously monitoring and evaluating the performance of your outsource businesses to ensure they meet your business objectives.

Ready to gain a competitive edge through outsourcing?

If you’re looking to streamline your operations and focus on what you do best, Right People Group can help. We specialize in connecting businesses with top-tier IT and business consultants. With our end-to-end vendor management and access to over 20,000 preferred vendors across Europe, we make it easy for you to find the right outsourcing partner.

Get in touch with us today and let us help you find the consultants you need for a leaner, more efficient business.

Conclusion: Aligning outsourcing with business strategy

Outsourcing is a powerful tool for businesses looking to operate more efficiently and effectively. From human resources to sales and marketing, from information technology to financial planning, there’s hardly a business function that can’t be outsourced. The key is to find the right outsourcing partner and to align your outsourcing decisions with your overall business strategy.