Outsourcing is the practice of letting third parties handle work that is normally performed within the company. Many businesses have jumped on the outsourcing bandwagon, saving money and time by outsourcing operations that require extensive manpower and equipment.
Online businesses may outsource operations such as inventory purchasing, accounting Amazon product SEO, customer service, etc. Owners may opt to delegate these tasks to an expert rather than hiring personnel to handle the jobs in-house.
Outsourcing will allow you to:
- Control capital costs – Outsourcing can cut costs, allowing you to release capital for other investments. It can also help you avoid large, upfront expenditures in the early stages of business.
- Increase efficiency – If you do everything in-house, you may accrue heavy costs for research, marketing, development, and distribution. Outsourcing some aspects of these operations to third parties will allow your business to scale down its expenses while offering more efficient service. Take payroll services as an example. A payroll department within the company will require employees, equipment, and software. Outsourcing the payroll function will cost the company a fixed amount that is usually significantly lower than what it would spend to run its own payroll department.
- Reduce labor costs – Hiring and orienting employees for a short-term project could be very expensive. Instead of investing in new hires and their training, outsource the function, and focus on other important business operations.
- Defer to the experts – Let the professionals handle complex tasks. Tasks that are critical require extensive knowledge and experience. Instead of assigning an employee to do the job, outsource it to professional.
To figure out if outsourcing is a good fit for you, make a list of all your business processes that could be outsourced. Compare the cost of outsourcing with that of performing the tasks in-house.