As your small business grows, one question you may be thinking of is whether or not it is worth it to outsource some of your work overseas. If you are considering outsourcing a portion of the work that goes into running your company, there are both advantages and disadvantages to consider before making this decision. Here’s what savvy business owners need to know about outsourcing overseas in order to make an informed choice.
Benefits Of Outsourcing Overseas
Outsourcing saves money
Outsourcing can help you save money by allowing you to hire someone else to do certain tasks for which you would otherwise have had to pay wages. For example, if you were paying yourself $50 per hour as a bookkeeper but could find someone who was willing to charge only $25 per hour, then you might decide to outsource those services instead. This way, you don’t have to spend all of your time doing accounting while also having to worry about finding enough hours in each week to cover both jobs. Outsourcing allows you to focus on other aspects of your business such as marketing, sales, customer service, etc., rather than spending most of your time managing payroll and keeping track of financial records. The cost savings can be significant when you allow someone who is faster and more efficient to manage tasks that are time-consuming for you.
Outsourcing saves time
If you’re already working long hours at your own job, chances are you probably aren’t able to devote nearly as much attention to your business as you’d like. When you outsource part of your workload, you free up time so that you can dedicate even more energy towards growing your business. Instead of being tied down with administrative duties, you can use that extra time to market your products and services, develop new strategies, meet potential clients face-to-face, and generally grow your business.
Continuing with the example of bookkeeping, let’s say that you are responsible for the following (knowing that the specifics may differ slightly based on your unique business model):
- Entering and updating stock and inventory counts
- Creating and updating client files (biographical information, pay preferences)
- Creating, updating, and sending invoices
- Payroll processing
- Reconciling accounts
How often are you required to do each of those tasks to keep your business running smoothly? And how long does the completion of each task take? Add up the hours that you spend on these routine tasks and think about what you could do for your small business if those hours were freed up?
What tasks or processes would you actually like to outsource? Do the above assignment to get a clearer picture of the amount of time saved by outsourcing these routine tasks and processes.
Outsourcing improves productivity
When you take stock of the areas of your small business that you could outsource, you are better able to see the potential for productivity to increase. Outsourcing doesn’t just save you time and money personally; by outsourcing routine, tedious, or time-consuming tasks, you free up your staff to better focus their own time and energy on high-value actions. Outsourcing can improve productivity for your staff overall.
Perhaps there are areas where outsourcing makes sense for your staff. It may not necessarily free up your own time, but you’ll be better able to redirect your employees time toward areas that they excel in or avenues for business growth that you haven’t had the staff power to pursue.
When you are outsourcing work overseas, you’ll be working with an individual or team in another time zone. While communicating with a different time zone may require some adjustment, it also means that you have people working for you around the clock. Improvements will be made to your business even as you sleep!
Outsourcing gives you access to experts
The benefits of outsourcing go beyond simply saving you time and money. One major benefit is that you can work with people who are experts in the area that you wish to outsource. You can tap into expert advice and guidance whenever you need it. Whether you’re trying to figure out how to streamline your bookkeeping, create a website, design a logo, or identify areas of inefficiency in your warehouse management, you can always turn to professionals who know exactly what you need. If you have an idea for something that you want done, but don’t feel confident enough to tackle it yourself, consider hiring someone else to help you achieve your goals.
In addition to gaining access to additional resources, you also gain access to different perspectives. By tapping into the experiences of other people, you learn from them and adapt your approach accordingly. For instance, maybe you’ve been using Excel spreadsheets to manage all of your data entry needs. But after talking to a professional accountant, you realize that this isn’t the best way to organize your finances. So instead of continuing to rely solely on Excel, you decide to switch to QuickBooks Online. The difference between relying on Excel versus QuickBooks is that you now have two options available to you. With both systems, you still have access to all of the same features, but you now have the option to choose which system works best for you.
Challenges of outsourcing overseas
Security Risks
One of the disadvantages of outsourcing overseas is the security risk if the tasks you are outsourcing have to do with accessing or handling data of any kind. But this would be true whether you outsource locally or abroad. Some things you can do to lessen security threats:
- Carefully vet your outsourcing company
- Require advanced security levels, such as multi-factor authentication, changing passwords often, and using a virtual private network
- Have clear guidelines about who can access sensitive data, when they can access it, and under what circumstances they are allowed to access it
Loss of control
You have to give up a certain amount of control when outsourcing overseas; you can’t physically be there to observe and supervise the way tasks are handled and priorities managed. The suggestions above can help mitigate some of these worries, especially when you take the time to choose a reputable outsourced company and you have clear guidelines about how they will manage your tasks. But there is truth to the fact that if you are going to outsource, you are going to have to give up some control. And that can only work when you have a high level of trust in your outsourced service provider and are confident in their ability to make wise decisions and then loop you in when needed.
Communication Challenges
Clear and honest communication can be challenging even under the best of circumstances. But when you are working with an outsourced team overseas, you add additional challenges to your communication. These can include cultural differences or nuances that take time to recognize and understand, language barriers and translation errors, and even communicating virtually means you lose the ability to read body language and tone. None of these are insurmountable challenges, but if you are going to outsource overseas you are going to need to put more time into relationship management in the beginning to ensure that you and your outsourced team are communicating accurately. Clear communication will be a major factor in your ability to maintain healthy ongoing relationships with your outsourced provider.
The bottom line is outsourcing has many pros and cons. Ultimately, though, it comes down to this simple decision: will outsourcing overseas allow you to maintain the quality of your products and services while freeing up time to focus on growing your business, creating new products and services, and expanding your vision? Only you know what is best for your business, but we hope this guide has helped you better understand the pros and cons of outsourcing.
Are you ready to outsource your bookkeeping but are unsure of where to start? Or maybe you’d like to keep your business relationship closer to home? Sound Accounts offers a variety of bookkeeping services. Contact us today to find out how we can best serve your needs.
For quick information on outsourcing overseas, check out our frequently asked questions and answers below.
FAQ’s
What is outsourcing?
Outsourcing is taking a service or a task that you might normally do in-house, and contracting with someone outside of your business to manage it on your behalf.
What tasks can be outsourced?
Just about anything! You can outsource your bookkeeping, administrative tasks, human resources, marketing, web design needs, application development, and your manufacturing, just to name a few. Any business operations you can do in-house, you can probably outsource to someone else.
What are the benefits of outsourcing?
Outsourcing often saves both time and money. It can allow you and your staff to work more efficiently and focus your energy on your own areas of expertise, while allowing other experts to manage aspects of your business that are more challenging or simply not time-effective for you to manage.
What are the downsides to outsourcing?
Outsourcing involves a certain level of loss of control; you have to be comfortable allowing someone else, perhaps even multiple people, to manage something that was once under your purview. Depending on the type of service or task you are outsourcing, there may be some security threats or concerns that you need to address. And you will also find that communication may be more challenging when you are outsourcing to a company that is overseas.
