7 Benefits of Outsourcing for Small Businesses

By | February 6, 2012

Outsourcing is the practice of paying a firm to complete a task which would usually be completed within a company. Outsourcing can mean anything from outsourcing business IT support, to engaging in outsourced IT and storing all of the company software on an external server; ending the need for a business ‘location’ in the traditional sense. Any aspect of business, whether it is operational or core, can now be outsourced thanks to the developments of the internet and communication systems.

No matter what stage of development your business is at, it is always possible to begin engaging with practices of outsourcing. In many cases, companies which begin outsourcing, find that they are better off, and shift to completely digital processes. This article will consider some of the benefits of outsourcing your IT systems.

Reduction in Capital Expenditure

Cost is not the only reason to outsource but it does offer a great potential for start-up businesses to avoid large expenditures at the start of their fight to become established. Software set up is costly but the monthly charge of external server hosting is far more manageable.

Lower Labour Costs

In an entirely internally managed business, there is a greater need for research and training, as well as higher marketing and distribution costs. All of these costs will then necessarily be transferred onto the customer, reducing your competitive edge. When outsourcing the economy of scale is more beneficial to the company and will inevitably allow for a lower charge for the customer.

Staff Induction Costs are Reduced

Hiring staff is a lengthy process. Assuring that you meet all employment legislation and find the right member of staff can be time consuming and expensive. By outsourcing, you will cut out this entire process because the company you are approaching will carry it out for you. This will enable you to concentrate your Human Resources where they are actually needed rather than wasting time and money.

Flexibility on New Projects

New projects often take a long time to establish and can require a large capital expenditure. By outsourcing it is possible to begin new projects almost instantaneously without this demand. Instead of struggling to hire, train and house new staff for your project, seek to outsource the services you require.

Focus on Development

When running a business it is often difficult to focus on the core needs of customers and business because of the periphery needs which managers find themselves dealing with. Outsourcing the less integral parts of your business will enable you to look strategically at your business and meet the core needs.

Appear Bigger

Outsourcing will enable you to compete with the bigger companies. Tapping into these opportunities will provide you with the same economies of scale that large businesses enjoy and you will thus be able to offer a comparable service. Outsourcing allows your one man business to appear far more significant than it actually is.

Risk Reduction

Companies face risks continuously. Outsourcing enables you to reduce the level of risk that you are facing because the providers will take large amounts of the responsibility off of your hands. Whilst risk will never be eliminated in business, it can certainly be reduced and avoided.

About the Guest Post Author: Tom Mallet is an Australian freelance writer and journalist. He writes extensively in Australia, Canada, Europe, and the US. He’s published more than 500 articles about various topics.