Why should your business consider outsourcing

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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The 1990s saw a huge surge in the number of businesses outsourcing functions to external providers. As the wave of outsourcing took hold, it became heavily associated with off-shoring and layoffs in mature western economies which brought with it a variety of negative connotations.

In addition to the obvious issue of internal staff losing their jobs, problems began to emerge as businesses went beyond outsourcing support functions and weakened their core competencies. Meanwhile, many businesses found that maintaining quality standards was more difficult than anticipated and controlling important support functions at a distance required robust contractual and procedural arrangements.

Despite early shortcomings, this steep learning curve means that outsourcing is now a well understood strategy for businesses and can be undertaken with greater certainty and less risk. It can offer a variety of benefits such as efficiency savings, access to greater depth and breadth of expertise and rapid access to resources for new projects.

Where should you start with outsourcing?

Functions such as finance and accounting have been outsourced by businesses long before the outsourcing boom. It makes sense for even the smallest businesses to outsource cumbersome but detailed tasks such as bookkeeping and payroll and this sort of arrangement can be set up relatively simply.

As businesses have got more comfortable with outsourcing to their accountants, it has made sense for them to go beyond the basics and get their professional advisers to help with more enterprise-level tasks such as budgeting and strategic planning. In the same vein, important elements of business infrastructure such as IT have long been favourites for outsourcing to contractors.

As outsourcing has become better understood, businesses have begun to see other non-core functions such as transportation, human resources, marketing and even sales as suitable for outsourcing. Moving outsourcing beyond finance and administration into areas such as operations and sales can be beneficial but must be backed by a strong economic and practical case.

Considerations for outsourcing

If a function is viable for outsourcing and the economic case has been made then a suitable outsourcing partner can be usually be found through a tendering process. It is essential that the outsourcing contract caters to the specific needs of the business and has appropriate control measures. Equally, it is important that a practical plan is put in place to manage the outsourced function from within the business; this may require additional internal resources and training.

Business will need to review a variety of structural and logistical issues when contemplating an outsourcing agreement which may include tax, HR, intellectual property and data protection. Consideration must also be given to monitoring service levels through key deliverables and putting proportionate mechanisms in place to deal with performance issues that arise during the contract.

We provide cost effective solutions that will ease your stress and free up internal resources to focus on other areas of your business which include payroll processing and advice, bookkeeping, company secretarial and more.

For more information please contact our expert, Joel Harding