Time to review outsourced services?

Jenga game getting the balance rightIt can be a false economy for SMEs to try to manage all aspects of their business in-house.
However, it is a good idea to regularly review the outsourced services being used and the partnerships or collaborations the SME has been involved in and the ebb in activity during the summer holiday season is a good opportunity to do so.
Typically, SME outsource their IT support, HR admin, book-keeping, payroll, PAYE and VAT and tax returns and many use virtual PAs for some or all of their administration. Some SMEs also outsource their manufacturing, distribution, sales and marketing.

What to consider when reviewing outsourced services

One of the main benefits of outsourcing can be that it ensures that essential back-office functions can be looked after by people who are up to date with legal and other requirements. Another is that the outsourced firms specialise in one aspect of your business so you should expect them to get the work right and do it on time.
When reviewing existing outsourcing arrangements there are several considerations and questions to be asked:
Skill availability in-house: employing qualified and experienced staff to carry out work related directly to the products or services the business offers is crucial to its success.  However, diverting them, or adding to their main work load by having them carry out other tasks may not be the best use of their time and expertise, which ideally needs to be focused on the main function for which they were employed.
Efficiency & time: people are rare rarely under-occupied in a SME, so asking them to multitask may end up making them less productive overall.
Costs: it may be tempting to think that costs can be reduced by doing tasks in-house, but again, it is a balancing act between reduced overheads and the benefits of specialist knowledge and expertise.  This is particularly important with services that are extremely technical, such as IT, or require extensive and up to date knowledge of regulations and legislation, whether it is accounting functions or marketing activities or dealing with employer’s responsibilities or Health and Safety matters.
The value of another perspective and in-depth knowledge can also bring huge benefits such as the accountant who takes a hands-on approach to supporting clients, rather than them being simply an information processor. They may have expertise culled from a wide variety of clients and, with an objective eye, can offer another perspective or suggest possibilities for improving profitability or taking a business forward.
Ultimately, when reviewing outsourced serviced there is a balance to be struck between cost, time and expertise, and the effects on a business’ reputation if standards slip by bringing tasks in-house to save money.

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