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Is Outsourcing Right for your Business

Written by Frank Fazzolari

Many business owners are feeling increased financial pressure. Operating costs are ballooning, posing a risk to both margins and sales.

Conversely, the current job market has allowed employees to utilise record-low unemployment to bargain higher wages and more favourable working arrangements.

The result of these pressures means business leaders are having to review their resourcing structures in search for more efficient, scalable solutions that promise to negate recent economic impacts and future market swings.

Outsourcing – A golden egg or the poisoned apple?

On this search for alternate resourcing, many well-founded fundamentals often point to the economics of outsourcing your non-core business processes to create a more stable, efficient, and scalable business model.

Although this doesn’t mean growing businesses are fond of this idea.

Why? There are a number of potential reasons, although one that is often pointed to is the lack of trust and oversight one has over an outsourced provider compared to that of an ‘in house’ employee.

True, there are examples of bad outsourced providers who have left a business’s high and dry. Likewise, there are endless newspaper articles detailing stories of in-house staff syphoning cash and driving their employer into the ground.

The cause of these stories often lends itself to the same catalyst. Lack of proper vetting, no structures for oversight and accountability, and a lack of industry knowledge to ensure best practice work.

So, if businesses could manage and overcome the perceived risks of outsourcing, would they want to outsource more where it makes business sense? It starts with first understanding what makes a bad outsourced supplier.

What can signal a bad supplier? – The Red Flags

These signs can be an early indication of issues stemming from service delivery and key person risk:

  • Billable hours ballooning unexpectedly
  • Work being incomplete or incorrect due to a lack of forethought
  • Poor response times and lack of work visibility
  • Forced service ‘breaks’ due to holidays

Other issues can branch from ability related issues, such as:

  • Lack of broader industry knowledge and changes
  • Slow technology adoption leading to inefficient processes
  • Location related constraints that restrict service delivery or expansion

From this list, I’m sure many people will find relatable issues with staff or outsourced service providers. Some might see them as a reason to move on from the partnership or employment and others might see them as the norms of doing business and bear the brunt of these impacts.

What if there aren’t Red Flags? – Look to the future for Growth

As author Ben Horowitz touches on in his book ‘The Hard Thing About Hard Things’, demoting or firing a long-term resource doesn’t have to be caused by problems. Rather, when looking at an employee or service provider who has grown with your business, you must also ensure they meet your future needs.

  • Are you looking for investors? – You’ll want a team that has raised capital before
  • Are you wanting to update your invoicing process? – You’ll want a bookkeeper who has best practice knowledge
  • Are you looking to hire casual staff? – You’ll want an HR (Payroll Specialist?) representative with knowledge of the relevant award rates

So how do you find the right outsourced supplier?

The intangibles do matter, don’t let people tell you otherwise. Attitude is key and working with a supplier requires a strong relationship founded in both service results and communication.

But, at the end of the day, the intangibles are the cherry on top, you need to make sure any supplier fits your future business needs, not just your current ones.

The following should be openly discussed and planned for when choosing a supplier:

  • Quality Assurances – What measures are in place to ensure service is of the required standards. SLAs, Work Reviews, Feedback Loops, etc.
  • Transparency Measures & Processes – How do you ensure workflow management is clear? Workflow Platforms, Automated Updates
  • Ability to Scale Service – Team Resourcing Structures, Ability, Pricing
  • Ability to Provide Other Services – Broad Service Offerings, Networks, Past Partnerships
  • Technology Adoption & Implementation – Technology Expertise, Past Implementation Experience
  • Social Proof – Do they have experience with similar businesses like yours? Are there testimonials and references?
  • Access to Key Personnel – If need be, can you escalate service-related issues to key resources or senior management?

Working with many high performing businesses at Visory, we’ve built our outsourced bookkeeping and back office services around these key aspects, aiming to manage many of the risks that a traditional outsourced resources pose. The core learning that we’ve had through our experience, and one that I hope to impart onto those considering an outsourced supplier, is to be on the front foot with setting expectations and don’t feel pressured into engaging with a provider until you feel confident that onboarding and ongoing service structures will support your current and future business needs. 

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About the author

Frank Fazzolari

As Head of Customer at Visory, Frank uses his operational and people background, to lead customer facing teams in established and rapidly growing businesses. Experienced in building and maintaining stakeholder relationships, a strong focus on Business Transformation and Change Management principles have allowed him to drive continual improvements across a range of different team structures.