AFRAID OF OUTSOURCING

Outsourcing is the buzzword of the 2000's, in many corporate departments, outsourcing essentially means subcontracting, letting someone outside the corporate/company umbrella perform work that might previously have been done inside. The argument for outsourcing is that it is more cost-effective, and requires less management time and effort than work done inside.

Should we welcome, or fear outsourcing? We should welcome it because it allows us to get to the strategic work at hand. We might fear it because we think it may increase costs.  Actually it reduces costs.  With consistent everyday rising costs in staffing the outsource fees are becoming the better choice.  Not only does it decrease overhead, it positively impacts productivity and accountability.

How far can outsourcing go? When I researched several businesses around the Capital District Area, their ideas about outsourcing were remarkably similar. None of them appear to fear outsourcing. All of them think we should prepare for, and take advantage of it, it is part of todays trend with available technology.

Here's what they had to say:

1. Director of Finance

Outsourcing is the wave of the future as companies focus on core competencies. We outsource accounting functions to a local firm, because we get a concentrated effort and negotiate a flat fee. This allows me to use my budget more effectively.
You can almost outsource the entire function, we started with payroll and human resources, then we went on to outsource: 1) accounts receivable (it improved our cash flow) , 2) accounts payable, and inevitably we outsourced, 3) financial reporting.  We keep compensation decisions, payment authorizations and check writing inside.

2.  VP of Finance

Most organizations are extra lean right now. If you're going to align your overhead costs with strategic business objectives, you have to decide where you can have the most impact--issues that relate to the business plan. Then you can consider outsourcing functions that might interfere with your ability to drive the business forward.

3.  Business owner

Every company faces staffing as a challenge. Some back-room operations never receive the funding and expertise they need. That's someone else's front-room. Eighty percent of your budget is headcount. Each year you give pay increases, and you have to get comparable productivity increases. If not, you become non-competitive.

We outsourced our accounting and finance functions and our vendor makes and answers all our receivable and payable calls.  We could never duplicate their efforts.  We don’t have the time to spend on overseeing the accounting functions, leaving a lot of room for delay, increasing risks, and losing money; this is parallel of us thinking that our efforts directed to sales and marketing are generating money. How contrary.  Outsourcing frees us to have the best of everything.  We can devote efforts on making money knowing that the earned is being managed just as diligently.

Figure out your cost centers, then see what you can outsource. You may want a consultant to do this for you.  But cost isn't the only consideration. You want to enhance your efficiency so you can focus on your core business. Outsourcing your accounting needs is  my recommendation for all businesses, big and small.  Companies should try it.  They won't spend any more than they are for staffing right now, I'll tell you that.  They will be very happy with the results.  I was relieved!!