The shift toward outsourcing continues as businesses seek ways to remain competitive despite streamlined budgets. According to the Journal of Accountancy, “Outsourcing is becoming popular even in small and midsize companies. Nowadays, a small business may not have staff members such as a human resources recruiter or a 401(k) specialist in- house…many of these functions are being handled by outsourcers.”
Here are a few ways outsourcing can save money for your company, according to the experts at AllBusiness.com:
Outsourcing human resource duties, for example, will save your company considerable expense by eliminating the need to hire and train HR personnel to perform duties such as benefits administration and payroll. Instead, your provider’s trained and experienced HR experts will be able to handle these duties expediently, resulting in substantial savings in terms of labor costs.
Outsourcing also releases capital for investment revenue-producing activities, which will in turn make your firm more attractive to investors.
In addition, outsourcing can save you the expense of hiring temporary employees for short-term projects, as well as the cost of paying benefits to in-house staff. And it allows you to avoid large expenditures in the early stages of your business.
Companies that handle every function in-house have much greater research, development, marketing and distribution expenses, which are often passed on to customers.
Although cost savings remains the number-one reason most companies choose to outsource, there are additional benefits as well, such as:
Time savings – Outsourcing business functions such as IT and HR provides relief from the administrative tasks involved in employee-related responsibilities, allowing you time to focus on strategies that will create growth and sharpen your competitive edge.
Start new projects quickly – A good outsourcing firm will have the resources to take on your projects immediately. Handling the same project in-house might involve taking weeks or months to hire and train additional staff.
Focus on your core business – Business managers must set priorities in order to focus limited resources where they will do the most good. Outsourcing can help shift you company’s focus away from peripheral activities and toward serving customers better.
Level the playing field – Most small firms simply cannot compete with the in-house support services that larger companies can provide. With the help of outsourced providers, small firms can appear “big” and enjoy the same capabilities, efficiency and expertise of large companies.
Reduce risk – When an outsourcing provider handles your business operations, they also assume much of the risk inherent in those functions, removing some of the burden of compliance with government regulations and other considerations.
According to outsourcing expert Frank J. Casale, outsourcing “is the great equalizer for small to medium-sized firms. Growth-oriented entrepreneurs can benefit tremendously. Not only do employees frequently gain access to better benefits, the owner gains freedom to focus.”