An Introduction to Small Business Outsourcing

For almost every business challenge, small business owners can either build a team internally or hire an outside firm to do the work instead. The latter approach, small business outsourcing, is growing increasingly popular. If you're keen to outsource, start by understanding the fundamentals of outsourcing.

Love it or hate it, outsourcing has become commonplace in American businesses.

Although a percentage of the public has a negative view of outsourcing, it provides some substantial benefits for business owners with a critical need for labor resources. In some cases, outsourcing can even play a role as a catalyst for change within the organization.

But before you start interviewing outsourcing vendors, you should know that outsourcing isn't the right move for every challenge you face. For example, it's better to fill some job functions with a temporary employee than an outsourced worker.

Here's some of the other information you need to know about small business outsourcing.

Defining Outsourcing

The term outsourcing gets thrown around a lot these days. But in many cases, the term is misapplied to short-term professional contracts or temporary staffing. True outsourcing is defined as assigning a task or job process that could be accomplished in-house to a third-party for a significant period of time. Depending on the nature of the outsourced job, these tasks can be performed on-site or remotely.

Outsourcing service providers can be located either in the US or in another country. In recent years, offshore outsourcing has been the subject of controversy in the U.S. According to some studies, more than 70% of the American public believes that offshore outsourcing is highly detrimental to the US economy. Whether this perception is accurate or not is irrelevant -- if you pursue offshore outsourcing, you'll need to be prepared for the possibility of encountering resistance from your workers and your customer base.

How Outsourcing Can Benefit Your Company

Outsourcing (either offshore or domestic) has the potential to offload peripheral work processes so your staff can focus on core business functions. At the same time, it's possible to achieve cost savings by leveraging the lower pay requirements of an outsourced labor force.

Clearly, it's not possible -- or wise -- to outsource many of the tasks that are part of your company's daily operations. Small businesses that have succeeded in outsourcing have used it to offload IT, network & telecom, HR, marketing, security and accounting functions. Although it may be possible to outsource other common tasks, it's important to carefully evaluate the merits and drawbacks of outsourced jobs on a case-by-case basis.

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