As a business owner or manager, are you spending your time on core functions that will help your business grow and accomplish its mission, or do you spend a lot of your time on the daily tasks of keeping your business going?
I was recently reading a chamber trade publication and I came across an article that I found interesting and thought would be beneficial. I would like to highlight some of the points the author brought. The article was written by Candace LaForge and titled “Emerging Trends: Outsourcing Operation Functions”
Candace says “It’s easy for a business to get caught up in the details of working in their business and forget the importance of working strategically on their mission. Try this test: Keep a daily activity log of staff time for a few weeks so you can determine the percentage of time spent on core functions versus non-core functions. You might be surprised."
With limited budgets, many companies are looking at business process outsourcing to help them with non-core business functions to have their employees focus on the core functions. Business process outsourcing is also viable if staff is lacking certain expertise or is already stretched.
How do you start the process of outsourcing?
Define your core competencies- these represent the reason of your business
Define your non-core competencies- necessary to run the business, but not what your business is about
Identify areas that are hurting, require a more sophisticated skill set or a higher level of out-put, or are non-core functions that take up large amounts of time
Start by getting your feet wet by outsourcing something small that is a great area of need
Some of the benefits of outsourcing
Ability to concentrate on core functions
Reduced costs
Higher quality
Improved internal efficiencies
Lower ongoing investment required in internal infrastructure
Increased flexibility to meet changing business conditions
Increased commitment and energy in non-core areas
Types of outsourced functions:
Payroll, bookkeeping and accounting
Special event planning
Communications- writing, graphic design, media relations
Marketing
IT support
Website development and maintenance
Database maintenance
Mailing services
When deciding on outsourcing, please keep in mind that everyone’s need is different and outsourcing works best with a plan so everyone knows what is expected of them.
I am going to focus my research paper on the benfits and drawbacks of business process outsourcing. Do you have any thoughts? Has it worked in your organization?
This is an interesting topic. In my experience in Accounting I have most typically seen outsourcing in the areas of collections and payroll. I think one of the most valuable can be payroll. Unless you are a very large company, it is very difficult to build and maintain an expert inhouse staff for less than it costs to outsource payroll to a company like ADP, AD Computer, Paychecks, etc. You also have the benefit of leveraging their experience with other clients in resolving issues that arise in your own business. Another upside is that in most cases these companies offer robust payroll packages that allow companies to do more than just process paychecks. The software can play an integral role in the financial reporting for the organization. Through data hosting, multiple locations can also be seemlessly integrated into one application for ease of use and reporting, without expensive IT infrastructure investments upfront.
ReplyDeleteOne of the biggest hurdles in moving inhouse tasks out can be the current staff getting in the way. Even if the situation is not intended to eliminate their positions they may see the move as threatening and either conciously or unconciously threaten the process. A manager must be prepared to address this issue when an outsourcing opportunity arises.
I am going to piggyback on Andrea's comment with a little experience I've had as well. I remember back in the early 2K's when outsourcing begain hitting the "white collar" workers and I got scared that this would effect my future as an accountant. However, my professors at PSU always taught me one thing that I thought was invaluable. "Diversify yourself." It may seem like common sense, but it has certainly worked during my career.
ReplyDeleteBeginning my career, I would say that I had 95% "core" activities as you have described. I had to work hard to prove that I could get those core responsibilites complete and show that my 5% of value-added activies were more than worth the investment of my salary.
Long story short, it's been worth the struggle.
I work in a Marketing department, and due to project overload we've recently begun outsourcing some work. I think the perspective from marketing is a little different than accounting. Marketing can outsource one-off projects, while other departments like accounting generally outsource tasks or jobs. I think that makes it a little easier for our staff to accept. They're not worried that they will be replaced by an outside agency because (1) it's a project-by-project basis, and (2) if we're outsourcing work it's because there's too much to go around. Where we do run into resentment is if the agency is awarded a creative project that the staff member would have preferred.
ReplyDeleteWhile outsourcing is a solution to relieve a temporary work overload for our staff, it does cause another problem for us managers: we now have another group of people to manage. This can cause more work for us than if our staff handled the work in house. Not to mention, all of the time involved in researching possible agnecies, and drafting and reviewing requests for bid.
These are all great comments on experiences you have had. This will help in my paper, thanks.
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