How to build a better business with outsourcing

Gabriela Montiel
Account Manager

(Expert Panel, Young Entrepreneur Council)
YEC is an invitation-only, fee-based organization comprised of the world’s most successful entrepreneurs 45 and younger.
As more businesses start to realize the benefits of outsourcing, they can slowly start cutting down on the number of things they do in-house. In many industries, the reduction in costs is so significant that it allows the business to thrive and grow much faster. However, even though outsourcing is an excellent idea for increasing profitability for a business, not all functions should be outsourced, even if they could be.

How does a company determine the best tasks and functions for outsourcing, and to what extent should that outsourcing happen? Eight members of Young Entrepreneur Council weigh in on the indicators they use to figure out the intricacies of outsourcing in their own businesses.

1. Innovation Is Needed
We generally see this happening in most companies due to the lack of time for innovation. Everyone understands how valuable the time is in a company, but if it is getting wasted in routine work, then it’s probably time to rethink your work. It is very challenging to sustain a business for so long without being innovative with your services/products. Innovation is part and parcel of the business. If you are not ready for the innovation in your company, sooner or later your company will have to sustain low growth or even bankruptcy. Hence, never let your company’s time get wasted in mundane work. Instead, you can just assign it to a freelancer and get it at a very minimal cost. Your work would be easier and stress-free, as well. – Vikas Agrawal, Infobrandz

2. Maxed Out Capacities
When a team seems to be maxed out in their capacities and projects are coming to a stall, it may be time to outsource in order to keep everyone moving forward. It’s important to be strategic in your approach to this so as not to kill morale. Ask your team what their specific needs are and what it would take to reach their goal in a timely manner before moving forward with your final decision. – Josh Awad, Depression Alliance

3. Inability To Deal With Specialized Tasks
We have two rules for outsourcing a task. The first rule is that if something is taking our internal team too long to do, it likely makes sense for us to outsource this—especially if it’s something that happens on a recurring basis. Building on that point, it’s likely taking too long because the person doesn’t have that expertise or they don’t enjoy it. Both are good reasons for outsourcing the activity. The second rule is that if it’s highly specialized, it makes more sense for us to outsource it to someone who spends their time immersed in that particular thing. A good example would be paid ads. If you’re doing paid ads part time, it’s difficult to stay knowledgeable on what’s hot, but if you’re doing it all day, every day, it’s a lot easier for you to have the most current knowledge. – Erin Blaskie,

4. No Advantages To In-House Tasks
The decision to outsource or keep something in house is always difficult because there are pros and cons to both. A good way to analyze whether you should outsource a non-core function is to look at what competitive advantages you gain by keeping it in-house. If you don’t gain an advantage, you should probably outsource the task. Take an accounting firm, for example. The firm needs IT support to keep its systems running properly, but hiring an in-house IT staff isn’t going to give the firm an edge over its competitors. It’s also not going to attract new clients or help professionals perform their core work more efficiently. Thus, it makes sense to outsource the IT department. If keeping a function in-house doesn’t give you a competitive advantage, you should think about outsourcing it. – Shaun Conrad,

5. Scaling Too Fast
Often, in young entrepreneurs and companies just entering the market, there is the fear of failure and that there may not be enough demand for a product or service. On the other hand, we also have another big problem: scaling up too fast without foreseeing that we won’t be able to meet customers and will experience delays and similar issues. This is a great indication that you should outsource.



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