Why would you outsource a critical component of your business? Isn’t that counter-intuitive? Right?
Well maybe not. Maybe it makes sense, but let’s check that out that logic.
Scenario #1 – Senario: We have a critical project and we have to get multiple copies of the proposal to give to our client. Our copiers here are perfect, but I don’t want to chance them jamming. Send it to the printer. Solution: Outsourced!
Scenario #2: “Maybel, when will you have the taxes ready to file?” Maybel responds, “with all due respect Mr. President, but those are prepared by our tax accountant.”
Scenario #3: “Mr. Marketing Manager, when will you have that commercial developed for airing on the superbowl?”. Marketing Manager responds, “Sir it will be ready from the Ad agency next week.”. President responds “Marketing manager, didn’t you create that ad yourself, you have plenty of talented people.” Marketing manager responds “That’s crazy. I have lots of great creative minds, but this ad for the superbowl is far too critical to leave to people that are inexperienced.”
In each Scenario, it makes complete sense to outsource. People and businesses have been doing it for millennia. It’s just that people are more conditioned to outsource some things more readily than others.
Outsourcing is more about making sound business decisions. It’s about determining whether it’s feasible to effectively manage an outsourced resource, and how to manage its cost. Most important to begin the decision-making process is to determine what the scope of the work is. Second, once a scope is developed, try to imagine how that scope could creep so you understand your risks and how you can manage those risks. With these two things in mind, then we apply cost and evaluate the work, the cost, and the risk. We know we cannot see all the risks, but you must make a reasonable evaluation.
So, before the analysis, let’s look at how outsourcing things can help you grow your business.
Financially
You may find that the outsourcing enables your company more than it was capable of originally. It always makes sense to find capable partners while you are not looking, than to be in a crush at the last moment with a great opportunity hanging in the balance.
You need someone to perform a function but you don’t want to hire then fire. Outside of the demoralizing affect this has on your other employees, it has a huge liability associated with it. You advertise for someone, you risk offending others not chosen. You hire them and shortly afterwards you terminate them. Will they go after you out of resentment for not being kept on when they thought they were doing so well?
Your business is perking away just fine, and all your employees are busily engaged without excess capacity. An opportunity opens up and although its probably not going to end up being a segment that will yield much after this project, its right up your alley and you might as well make some money on it by bolstering your workforce with outside help.
Rapid deceleration from a project. Sometimes you are exploring an idea and when that idea doesn’t pan out, you need to be able to back away from it quickly. By outsourcing, it’s a simple stop notice. Go no further. If you try to stop quickly using your in-house staff, often times its many people that have become engaged and its not so easy to decelerate with demoralizing the team.
Its also a great way of exploring new ideas without exposing those ideas all throughout your company. Maybe you just don’t want them to know something just yet, or maybe you know they don’t want to see you expending resources in other areas. In any case, its easy to outsource to an entity that can run with the ball quietly and get the idea ready to hand off to a team with a plan in place. Most employees don’t do well being handed “whitespace” and told to create something of it. On the other hand, most employees feel empowered when given a task and and a set of goals to go after. Outsourcing to the point of hand off just makes sense.
Confidential:
Some things just need to stay quiet until you are ready to move on them. By using a Non-Disclosure Agreement, you can use outsourcing to maintain your anonymity while vetting a potential business venture or setting up a project. Whether you know it or not, that happens every day. People need to look at whether what they want to do is feasible, but if their competition found out about it, it would likely become significantly more difficult. Either they race to beat you to market; or they become obstructionists and attempt to drive your costs up by stirring up a hornets nest of problems.
Confidentiality is a fickle thing. First its very hard to get your own employees to understand confidentiality because they usually don’t even understand who in your organization knows what. It is, often times, assumed by lower level employees that all senior management understands what is happening, and only lower level people shouldn’t know. When you outsource, its very clear that the client determines who can know what. An alias storyline can be developed to help the outsourced company perform the objective.
Sometimes you just need anonymity from your own company. You cannot present a potentially controversial concept to other executives or your board of directors, until you’ve done your homework. They have empowered you to move the organization forward and have authorized you to spend exploratory monies towards that objective, but only to a point. Using an outside company allows you to maintain secrecy while continuing to move forward. They will help you do your homework prior to presentation. Some of the greatest business ideas were killed before they ever got started simply because the presenters hadn’t done enough homework prior to their initial discussions.
Practical Reasons
Sometimes there are just several practical reasons why you need to hire a company. Examples might be:
Your company is located outside of the area and you just need someone to represent your interests in the local area. This can be permanent, or just temporary depending on the situational needs. It can be to attend a bidders conference, or respond with boots on the ground to a customer issue, or as a Manufacturers/Owners representative.
Your company is flat-out sprinting on some project or mission. Your customer from last year needs your attention and you need to find the balance between current commitments and customer satisfaction. Don’t choose, outsource to someone that can represent your needs and deal directly with you; without causing your company to lose focus on current commitments, but while maintaining what got you yesterdays and tomorrows customer, customer service and responsiveness.
Conclusion
The most important aspect in considering outsourcing is the group that you are looking at working with. First, they will never be absolute experts in what you asking them to do because if they were, they would be your competition. What you are really looking for is a group that listen to your needs, and understand your goals; then look with fresh eyes that are not jaded with your industry baggage about how something can be accomplished. You want them to work autonomously, but understand that as they dig deeper, they will likely need to come to you to ask leading questions to help ensure they stay on track. Make sure your goal is written down and is concise as it will be the one thing that guides the entire project, and what the final work product is measured against. If, as the project is being developed, the goal is changed somewhat, keep track of the original goal and track the changes.
Next develop a proper timeline with intermediate milestones and measure progress against them. Make sure everyone is clear and the timeline goals are reasonable and accepted by both parties. Define the milestone and measure against it.
It all sounds familiar doesn’t it. It’s no different than issuing a contract to your vendors, and it’s no different than what you receive from your customers. Don’t reinvent the wheel, just be sure you understand it. If there are intangible aspects of the project, you can still define the other aspects, and leave the ambiguous ones with only a goal attached to it.
Outsourcing has become a word synonymous with large corporations sending their work overseas, and has therefore earned a negative connotation. This really isn’t the case at all in most circumstances. Every business already outsources services already. Unless you are entirely vertically integrated in its truest form, then you are outsourcing already. In many cases, the outside world will require you to outsouce to independent third party firms for items like audited financial reports.
Maybe it’s time to rethink what outsourcing means. It could mean growth and future profits to your company if managed well. It could mean seizing an opportunity that would otherwise pass you by. It should also be looked at as a potential way of dabbling into unknown territory that you aren’t sure you are fully committed to yet until you see how it plays out.
In the next article we will explore how best to manage an outsourced resource.
Ashtonco, LLC™ is a exceptional program and project management company. Copyright 2017, all rights reserved. Contact us at http://www.Ashtonco.com