Is Outsourcing a Good Decision for a Small Business?

Is Outsourcing a Good Decision for a Small Business?

December 5, 2018 Off By Admin

It’s called outsourcing when companies get third-party agents, vendors, and contractors to run services for them. During the initial year of setting up a small business, funds might be inadequate to maintain specific operations of departments. The areas to consider for outsourcing might include payroll, training administration, and human resource functions. Outsourcing doesn’t mean hiring experts to manage less essential tasks. However, showing poor management of departments in organisations might not be cost-effective than outsourcing to specialised vendors. To build momentum for every new business, ensure there are no bottlenecks with the organisational process. More so, administrators can use outsourcing strategies to reduce risk and increase business interests. Vendors can sign service-level agreements and performance review contracts that will add value to organisations.


Selective or Total Outsourcing?


It might be a wise decision to collapse of the entire structure (or a department) for total outsourcing. This decision transfers absolute responsibility to the contractor or external administrator. In contrast, instead of collapsing an entire division, selective outsourcing may target poorly managed functions within a department. Facilities and technical installations that are poorly managed, and processes that are time-consuming can be partially-outsourced to a specialist vendor.

Why Is Outsourcing a Good Decision?

No micro-managing process

Having no control over business activity means the absence of a micro-managing process for your team. Before you make plans to outsource, consider vendors with track records that can offer satisfactory service delivery. Outsourcing is a process of relaxing the watchful eyes that needed employees to get quality work done. It saves a great deal of stress when there’s no need to micro-manage vendors that can effectively carry out a task to its letter.

Improvement of efficiency

Efficiency is the first concern of business operations. Small businesses might lack the financial strength to assemble in-house experts in a department. However, outsourcing companies might have access to freelancers, and experts for their job roles. The vendor company is often a specialist firm of experts with adequate work experience to improve the department. More so, employees become productive when their job functions run smoothly, and departments exceed their targets. Unlike alloting hours for departmental functions, before objectives are met, outsourcing companies hire specialists that work remotely after regular work hours. Unproductive staff might be rookies or interns that lack the requisite skill for the job, but experts bring efficiency.


Cost savings

An efficient workflow process is cost-effective. It’s beneficial for a small business of twelve employees to outsource its HR functions completely than keep a unit of redundant employees that earn wages. Instead of spending huge budgets yearly to train production employees, administrators of small businesses can outsource factory operations. Consequently, contractors can operate manufacturing plants on a sharing-formula basis and remit revenue accordingly.



There are clauses of performance indicators and options for reviews in a contract when outsourcing is considered. The understanding that payment or service charge will only be paid for quality service from vendors is a game changer for small businesses. Obligatory and legal agreements are documented to support accountability from the outsourcing company. Usually, when the expectation of high performance from internally provided departmental functions is lacking, business owners have no choice but to switch to vendors.


More productivity

Exerting control over your employees might be a tough management practice. However, the decision to outsource will ease the pressure that comes with supervision. Managers and team supervisors of small businesses can transfer the stress from extra workload to the outsourcing specialist. More so, companies might decide to cut down idle time from employees that struggle to focus on improving their productivity. Usually, professionals with core competencies and skills don’t need efforts to eliminate distractions during work. While making progress on meeting their targets and deliverables, outsourcing specialists offer a better quality of work.