Outsourcing – friend or foe?
Web agencies are frequently at the forefront of outsourcing, they are an obvious area to outsource. Often organisations don’t have the skill, time or the resources to design, build and/or maintain a website.
But what do you think when you hear the term outsourcing? Many people instantly imagine negative results - queues of employees heading towards the jobcentre, mass redundancies and pay cuts. The image of outsourcing is possibly a damaged one with too intransient camps either bigging it up or doing it down. The big outsourcers paint a rosy picture of efficiency and wonderful cost savings. On the other hand there are the diehard opponents, often the Unions, who detail an altogether darker landscape of pay disputes and redundancies.
So my question is... is outsourcing really so wonderful or indeed so bad? Should outsourcing be considered by smaller organisations. Or is it only really for the large, complex multi-national companies and massive government departments? This article explores what functions could be outsourced, the Pros & Cons of them from the point of view of a small company and what benefits it could bring.
What could I outsource?
We’ve all seen various governments attempt to bring down public expenditure by sub-contracting or outsourcing functions to the big outsourcers, which works for the larger organisations. But in the real day to day world of small business that model clearly wouldn’t work.
Just about any business function can conceivably be outsourced. As a rule of thumb, functions that are outside your company’s core skill set are good candidates for outsourcing. Every business has its purpose – its main skill, service or product. It is that which has made them successful. All the peripheral functions that are required to keep a business running shouldn’t impact on the primary focus of the business. It therefore makes sense to think about these areas for outsourcing. After all, we’re not all IT geeks, number crunching accountants or Kim and Aggie style cleaners. Neither do we have the time, money or even the capability to become so. Even at home we tend to outsource things – most of us would pay a plumber to fit a toilet rather than Googling how and taking the risk of a rather wet bathroom!
So where to start? Well the high cost and high skilled functions is probably a better place than any. Many companies both large and small now outsource their IT rather than pay to have a dedicated IT administrator or team. The reason being that IT staff tend to be expensive, have to be trained regularly in the ever evolving technologies and often have a high turnover rate.
In-sourcing, Near-sourcing, Off-shoring??
A quick search online offers a bewildering number of avenues: ‘in-sourcing’, ‘near-sourcing’, ‘off-shoring’, ‘co-sourcing’, ‘hybrid sourcing’ or ‘collaborative sourcing’. In fact, these are all just different forms of outsourcing – renamed, repackaged, and sold as the brand new thing in the outsourcing market, and it is causing a huge amount of confusion.
So what do they all mean?
- In-sourcing - Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced
- Offshoring - Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Offshore simply means "any country other than your own."
- Co-sourcing - more than one outsourcer is involved in delivering a service
- Hybrid sourcing - This is where you basically use elements from all forms outsourcing
- Collaborative sourcing - it’s when the outsourcers staff work alongside in-house staff. So for example, the outsourcer may supply specialist staff for a helpdesk to work alongside the customers help desk staff
- Near sourcing - Near-sourcing is a term used to describe a business strategically placing some of all of its operations close to where its end-products are sold.
What are some pro’s and con’s?
- Focus - The first and possibly most obvious pro is that you can get on with what you’re best at, without the distractions. No more struggling to get the Sales Manager’s PC to boot up – a phone call and it is somebody else’s challenge. Want to get a change done to the website urgently? At least you’re not going to be digging out your Dummy book!
- Finances - The release of cashflow otherwise used to employ specialist staff can be re-invested in the business. Carefully considered and planned outsourcing can save cash despite the horror stories on large government outsource deals.
- Contractual safeguards - Not only is the function another companies issue, but you also get the added reassurance that the service is backed up with a contract. You become the master of the function rather than being a slave to it.
- Expertise - Increased knowledge base and spread is also a highly desirable benefit to outsourcing. With a carefully selected supplier you get the advantage of more people and more skills being available to you that you could never hope to have inside your business.
Outsourcing everything isn’t going to be the silver bullet to your problems though. There are downsides that should be considered.
- Loss of control - Many people feel that they lose some “control” when a function is handed to a third party. You’re suddenly bound by their processes and procedures rather than ones you’ve created yourself.
- Contract length - Often outsourcing contracts can be for a long period of time so it is important that the step is considered carefully and with the medium term in mind. Suddenly wanting to change the vision of how your company works might not be so easy if you’re locked into a contract.
- Crossed wires - Sometimes the detach from an in house function to a third party supplied one can lead to misinterpretation. What you think you’ve asked for and what the supplier believes you requested can be two entirely different things. It’s important to ensure both parties are of the same understanding and to do so early on.
But why should I outsource my Website?
So how does this relate to web design? One off tasks or on-going projects are a favourite for handing to a specialist organisation. Some of you could knock up a very basic website using a “Web Sites for Dummies” reference materials but your website is the shop window to the world, so why wouldn’t you want to ensure that the site has been designed by an experienced Web development professional?
Many would suggest it would be better to be outsourced. Building a website requires more than just coding skill so the likelihood of a single member of staff producing a slick and professional site is very slim. Web design companies employ a whole host of differently skilled staff for this very reason.
Things to consider - The good, the bad and the ugly…
- Agencies will have the complete range of skills - They will have the skills and resources to design, develop, build and maintain your website.
- Agency rates may seem really expensive at first look, but they could work out to be very cost effective. The cost of hiring a team of designers/developers can involve very high costs.
- It can be very difficult to retain a good member of staff. You have to ensure that their skills are being developed - talented people will become bored and restless if they are doing the same thing everyday. This is a great benefit of hiring in skills, you have highly skilled and talented individuals working on your project.
- Using an external team can be great because they are able to play devils advocate, challenge internal views, sidestep internal dogma, as they don’t have the constraints of internal politics, which can make them more agile.
- Lose of control - Some organisations are keen to keep most processes and functions in house - there may be perceived problem of lose of control when outsourcing.
- Outsourcing (offshoring) to other countries can cause all manner of problems. There could be issues such as cultural, language and time differences, so these need to be carefully considered.
- You could hire in a freelancer, although this could pose other issues - they are an unknown quantity, there isn’t the ongoing relationship and that isn’t great long term.
- The bonus of using Internal member can be great because of their intrinsic knowledge.
- Do you need 24/7 support? This is something that you need to consider depending on your organisations requirements - If so you need to ensure that you choose an is this something that you require.
Friend or foe?
So it would appear that outsourcing is neither of the two often described extremes. It’s somewhere in the middle.
If planned and implemented carefully then it can be your friend but rush into it in an unconsidered manner and it will most definitely become your foe.
But the idea of Internal knowledge working with an external team could be the best of both worlds!