Innovation Corner


Permanent link for What to Outsource on February 3, 2023

Entrepreneurs get in the habit of doing it all in their business, but as the business grows, they need to add staff to handle the growing workload. Being fully engaged in all aspects of a business, it can be hard to decide what to outsource. How do you decide what to outsource?

  1. Outsource repetitive processes that do not require deep knowledge about the business and need a fast response rate. The best processes are those that the startup's owners or employees already know well; they can be effectively managed with minimal effort. This might include front-line customer support, certain aspects of social media marketing, or the manufacturing and shipment of merchandise that is not a part of your main product or service.
  2. Outsource processes that require deep knowledge and that are outside of the core processes of the business. This would normally include many legal and human resources functions.
  3. Outsource capital-intensive operations, but have a plan to closely monitor the quality and cost-effectiveness of output. These are almost always core processes, and could include manufacturing.

It can be helpful when deciding what and how to outsource, to think about whether or not a process is a core process of your business. If your business cannot run for any length of time without performing a process, that process is probably a core process. If you could get away with delaying a process for a while, it's not a core process. If your business uses KPIs, your core processes usually be associated with a KPI. It's usually best to keep core processes in-sourced and under your direct control, and look at other processes for outsourcing.

Core processes should usually be in-sourced; other processes can often be outsourced.

Categories: management outsourcing
Posted by Thomas Hopper on Permanent link for What to Outsource on February 3, 2023.

Permanent link for Should you hire or outsource? on January 13, 2023

Businesses must add staff to grow and better serve customers. Deciding how to add staff can be a tough choice. Adding employees allows you to retain control over how the work is done, and is often cheaper over time than outsourcing. Outsourcing only allows you to specify the work product, but you can get fully-qualified people without the extra effort required to maintain compliance with labor and tax laws. So how to make this decision?

Entrepreneur Magazine has you covered. Here are 7 Questions to Help you Decide if you Should Hire Staff or Outsource. I think that the first two are particularly good rules-of-thumb:

  1. Do you expect the business growth to be short term?

  2. Is the workforce need a business differentiator?

Even for entry-level positions, hiring is an expensive and time-consuming process. You really don't want to make that investment if your need to hire is driven by a growth in sales, and that growth is likely to be short term. Outsourcing can look more expensive to a cursory analysis, but looking at the total costs it's usually going to be cheaper and easier for employment contracts of less than six months and in some cases it's cheaper for contracts of less than a year or so.

However, if you're being driven by a need to staff in a competitive advantage - Entrepreneur gives the example of a golf ball manufacturer needing to design better golf balls - then bringing someone onboard and keeping them creates long-term competitive advantages. This is an example of the three laws for making a company truly great that I'll share in a future blog post.



Categories: management outsourcing
Posted by Thomas Hopper on Permanent link for Should you hire or outsource? on January 13, 2023.

Page last modified February 3, 2023