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What to Outsource

If you are already convinced about the wisdom of outsourcing, perhaps the next question you might want to ask is what tasks should you outsource? With a long list of virtual assistants offering a plethora of services to you, you would welcome some kind of a guide on what tasks can be outsourced.

One rule of thumb is you should not outsource your core activities or tasks that are central to your business operation. As an example, if you are an accounting firm you would not outsource the preparation of financial statements or even your bookkeeping tasks. Why? Because this is what you do best so it is inconceivable that others will be able to do this better than you. But components of your core activity may be outsourced. As an example, legal transcribing may be outsourced by a law firm but the writing of legal opinions should never be outsourced.

Another factor to consider is the importance or impact of the task to the overall result of your business operation. Handling customer complaints is an example of a task with crucial importance. Mishandled, a customer complaint can grow into a problem with complicated repercussions, including a lawsuit. So you will want this particular task to be handled on site by people you or your managers can directly supervise.

The principle to observe here is if the cost of an error is greater than the savings you can realize from outsourcing, you are better off not outsourcing the task. Your business organization’s inventory of skills is another factor that can determine whether you should outsource or not.

If you do not have the expertise to properly perform the task, such that the likelihood of errors committed and reworks done is high, then you will be better advised to outsource it. Even if the cost of an error is low if the incidence of error is high, it can come out very expensive. Tapping off-site expertise by outsourcing is a viable option in this instance.

Your company’s existing resources and level of utilization is also a determinant in outsourcing. If a task or a project can only be performed by increasing your office space or hiring additional personnel, you might want to consider outsourcing as an option.

Outsourcing becomes a viable option especially if the project has a finite duration and is not likely to be repeated. If you still have a slack in the utilization of your company resources and you have the needed expertise or skills to do the task, then outsourcing may not prove to be a sound option even if the outsourcing rate per hour is less than what you are paying your people. This is because whether you outsource the task or not, you will still pay your employees.  Salaries are sunk costs and you pay them whether your employees are doing something or not. So the outsourcing cost is an addition to your personnel or overhead cost.

The nature of the task to be performed is also a factor in deciding whether to outsource or not. If on the one hand, a task is so simple that it can be performed by anybody else, why use your expensive human resources to do it? Let virtual assistants that charge less than what you are paying your people do the job. An example of this is data grabbing, or bulk ad posting. These tasks are so simple that they can be done by virtually anybody, especially by a self-respecting virtual assistant. But because of the volume, they can be very time-consuming. By insisting that they should be done by your people who are being paid at twice the rates of the virtual assistants may not be a sound strategy.

If, on the other hand, the task is highly technical such that it requires special skills or expertise which your business organization does not have, then you are better off outsourcing it. An example of this is designing a website for your company. If you do not have a resident IT who can do it, then outsourcing is definitely the way to go. Website design is a highly portable technology so there is no need to insist on developing it yourself. In other words, why re-invent the wheel when you can easily buy one?

Outsourcing is not really a new development in business. There are tasks that have always been outsourced or performed by independent third parties simply because the law requires it. Examples of such tasks are independent audits. They are either done inside or outside the company premises. Sub-contracting in the construction industry is another example although the underlying reason is not the legal requirement but the unavailability of expertise.

In the end, the overall consideration in deciding whether to outsource or not a task is economy and productivity. A healthy balance of these two factors is definitely a sound strategy.

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