Your business will have its key product or service as well as a defining sector. Even where the business expands beyond this, its core brand still relies on an image of definable competencies. But with limited resources or an expanding portfolio, which tasks do you retain, and which do you outsource?
No business works in a vacuum. Dependencies on suppliers and contractors, as well as business partners, are necessary to maintain the networks of functionality and influence. Where, then, does a business draw the line between its core competencies and the products or services that it outsources? The answer lies in the availability of expert help.
Outsourcing today is more viable than ever. Here, competencies often lie with independent contractors, freelancers or specialist companies and there may be significant gains in pushing particular functions their way. Additionally, the rise in digital communication, and particularly online platforms, makes assessing the suitability of an outsourcing option much easier than before.
So what are the key questions that underlie the right strategy for outsourcing?
Consider the primary function of the business. What is the key competence or brand? It usually makes sense to retain this in-house. This is probably the expertise that established the company and it’s what the business is good at. Furthermore, if the brand is defined by particular excellence, its brand is likely to be compromised if does not handle this itself. A business that sells itself on hand-crafted artisanal products, for example, will be undermined if these products are made by an outsourced contractor. But on the other hand, nobody would expect it to handle its own delivery services.
It is important also to consider the efficiency of outsourcing. There are cost overheads in procuring and managing outsourced functions, and it makes sense for a company to retain its key competencies. On the other hand, where the function in question involves expenditure on equipment or labour, it is wise to outsource these services to a dedicated specialist. For example, if you print professional-level business cards every couple of years, it would be an excessive outlay to buy high-end printers yourself.
For small businesses, repetitive tasks that involve high equipment costs, but low labour value, are very suitable for outsourcing. Efficiencies of scale and the reliability of a dedicated operation make such tasks well-suited to an outsourced service.
Decisions about outsourcing will, in general, be decided on the grounds of what is core and what is peripheral to your business. Understand these differences and the options will be clearer.