With the huge increase of freelancers and small businesses in the UK it is not surprising that outsourcing is a quickly growing industry. Almost all sectors are now benefiting from outsourcing by increasing their efficiency and it is revolutionising much of the way that we conduct our business.
According to Deloitte, in 2017, 31% of IT services were outsourced, which is similar to the finance and healthcare sector, with the HR sector also seeing a growth of 32%. It is estimated that the manufacturing industry however, outsources much more at around 43%
The figures are extremely encouraging, and with more and more freelancers and small businesses discovering the benefits of outsourcing these figures will only improve (with worldwide outsourcing trends already expected to increase in 2018).
When it comes to outsourcing, anything that is not strategic to your business can be outsourced. This covers everything from accounting, human resources, marketing, IT, transportation, manufacturing, product development, administration and sales. The concept of paying only for what you need, with no upfront investment costs, makes outsourcing a compelling solution for most companies.
However, there is no such thing as the perfect solution and it is always worth understanding the effect outsourcing could have on your company and its culture before you dive in.
The Pros of outsourcing
Not having to hire more employees can save you a huge amount of time and money. There are a lot of things to consider when hiring staff and when you are talking about human resources, if you get it wrong the penalties can be serious.
What do you need to do when employing staff?
- Employment checks. Do they have the legal right to work in the UK?
- Does the job require a DBS check? Is there a vulnerability or security issue?
- Employers’ liability insurance. There may also be other insurances needed depending on the work.
- Terms & Conditions. You need to make sure you have these in place for everyone who is working for you for longer than a month.
- Do you have a good contract that protects both yourself and your staff?
- Register as an employer. You need to tell HMRC before you pay your new staff.
- Do you need to automatically enrol your staff into a workplace pension scheme?
- National minimum wage. You need to decide how much you are going to pay and make sure it is at least the national minimum wage.
- What hours and holidays are you going to offer?
Why not take a look at our HR success guide for more great advice: HR success
- Greater choice
If you are hiring a full-time member of staff to work in your office, you are restricted to your local talent pool and this could mean you have to compromise.
Outsourcing allows you to expand your search to not only the rest of the UK but the rest of Europe, USA and Asia. Having access to the internet now gives you the opportunity to work with anyone offering services from anywhere in the world.
- Saving money
Many smaller companies just don’t need an HR company, accountant or IT professional full or even part-time. Employing staff when there is only a limited amount of work is counterproductive.
Even if some freelance professionals charge higher rates for their work, if you are paying them per specific job and only for exactly what you need, you can save huge amounts of money.
By outsourcing an expert for a specific job, if you do your due diligence correctly, you should be relieving yourself of the time needed to train them. Your outsourced professional should also have experience of working like this and should be able to pick up and execute your work without issue.
It is highly likely that at some point you will hire someone that is not the person you hoped they would be. There are millions of choices out there and you will never truly know how good a person or company is until you actually start working with them.
Much of our legal system is set up to protect the employee, as I’m sure it should be, but if you are unfortunate enough to hire someone that cannot do the job or becomes disruptive, you could be in for a very rough journey if they decide to put up a fight.
The breakdown of a relationship is never a good result but the potential of getting into hugely expensive, stressful and time-consuming battles with employees is something that can be avoided with outsourcing. The damage to a business that such a battle could do should not be underestimated.
If your outsourced relationship goes wrong you can quickly put it down to experience and move on.
The Cons of outsourcing
We’ve highlighted the benefits of outsourcing but as with everything there are also some cons which everyone should be made aware of, so the most informed decision can be made for you and your business.
- You can outsource to anyone in the world
Yes, this is also a pro as you widen your talent pool, but what happens when you find the perfect candidate and they work on the opposite side of the world to you? Time differences then could become a potential issue. Waiting for responses, things which need quick updates or require amendment could then prove to be problematic and time consuming. Of course, as a solution, project deadlines could be considered and agreed upon up-front, but again this has to work and suit you and your business needs.
There’s also the issue of potential language barriers, which not only can affect how things are worded in documents but also how things are received and understood by both parties.
- Communication problems
With outsourcing, not only are you communicating with someone who isn’t necessarily sitting by your side, you’re also relying on technology. Just how reliable can our internet connections be, managing Skype interference when you’re in the middle of a call, or if someone has increased security and firewalls up and your emails just won’t go through?
Also, what type of communication does this person prefer? What do you prefer and how often. Do both methods match? With reports already highlighting that many employees are not engaged at work, how can we make sure outsourcing doesn’t also fall into this category, if not worse?
- Handing over control
It’s hard to hand over control at the best of times but outsourcing for some reason makes it that much harder. You can’t keep on top of a freelancer as much as an employee sitting in your office.
If you know you have a strong desire to control everything then this could be a real sticking point when building and creating new business relationships with contractors.
The creative industry is amongst the highest quality industries out there. Nothing is put out to the world without the most stringent of quality checks. However, when looking at outsourcing quality and the standards you maintain need to be communicated in full. Both parties need to understand the expectations placed upon them.
Contractors don’t know your business as well as you do, you must stress the quality in which you expect the project/task to be returned to you.
- In business, company culture is important
Those employees who have bought into your company culture and values are those that will do the utmost to support it. However, if your company has never outsourced tasks before this can send shockwaves through the business and can have a negative impact. Without discussions surrounding the reason why, employees can often feel overlooked, like they’re being replaced by less expensive versions of themselves.
However, if you do have a strong company culture then managing this process through being open and honest is most certainly a step in the right direction.
With anything new, there will always be pros and cons and as a business leader we’d recommend making your own personalised list of outsourcing benefits/risks, based on the information above. What this will lead to is more specific points; probably generate additional questions, as well as highlight those solutions best suited to you and your business needs.
Like every individual, every business is different. Finding what works and what is right for you is the key. Outsourcing is a great addition to the available solutions for your business and with the advancement in technology as well as the push for a much more flexible work-life balance, something every business should at least be considering.
Fashion Rider will be producing more business guides shortly. If there are any areas you need help or advice in, please don’t hesitate to contact us: firstname.lastname@example.org