In today’s business world, the most successful organisations are the ones that are able to adapt to changing circumstances without becoming distracted or losing momentum towards their goals.
Typically we call this “business agility”.
But really it’s just about having the right processes, systems and services in place that can adapt to the surrounding environment both inside and outside the organisation.
Business process outsourcing is increasingly becoming popular among businesses looking to stay agile, without sacrificing how they work.
Nearly a third (30%) of UK businesses say they are preparing to outsource more by 2022.
If done properly, with the correct research and smart implementation in the right areas, outsourcing certain functions can help you remain agile.
It can allow you to free up time and resources to put into your core business functions.
And it enables you to bring expertise into other areas of your business more effectively than hiring them in-house.
In this guide we’ll take you through everything you need to know about outsourcing for your business so you know what to look for, what to ask and how to bring in the right resources.
What is business process outsourcing?
Simply put, outsourcing is the process of contracting a specific business function to a third party with particular expertise in that area.
Today, the term ‘business process outsourcing (BPO)’ has come to sit more within the realm of IT outsourcing.
But in reality, BPO encompasses a full range of business functions and can include anything from HR, to marketing to telephone answering and diary management.
A typical outsourced function is one that would largely be carried out the same across any organisation and doesn’t require any specific expertise in the outsourcer’s industry (although there are industry specific outsourced functions).
What role does business process outsourcing have?
Outsourcing plays a vital role in many organisations, but is particularly beneficial to those that require specific expertise, without necessarily having the budget or resources to bring them in-house.
By outsourcing these important functions, businesses can put more focus on their core services and objectives.
In the last two years the need to be agile, lean and focused on key services has been thrown onto centre stage.
Focus on revenue generating activities, business development, growth and future planning have become the order of the day for businesses looking to survive the challenges of the next decade.
Anything outside of those key functions is primed for outsourcing.
What are the benefits of outsourcing functions?
If done properly, outsourcing business functions can bring many benefits to any organisation, such as:
Adds additional resources quickly
Hiring staff for specific business functions can take a long time.
You have to advertise to find people, interview people (at least once) and then wait for them to work their notice before they can start.
That’s assuming you find someone you like and the other person actually accepts your job.
Many outsourced services are highly flexible with the level of service you can get.
If you need more, you just pay more and then scale it down again later on.
Hiring staff internally is much less flexible.
You have to pay their wages regardless of how busy you are.
Can reduce costs
Hiring staff can be an expensive proposition.
Not just in terms of salary, but with the other associated costs and overheads.
Costs like sick pay, holiday pay, insurance, pension contributions, training budgets all add up when you hire resources in-house.
This can take much needed resources away from your primary business function and can put your future growth at risk.
Maintain focus on the primary business function
Outsourcing business functions you don’t have expertise or resources for – whether it’s call answering, accounting or marketing, means you can put more of your focus on delivering your primary business function.
While there’ll still be some oversight into the service you’re getting from an outsourced business, you can operate it with a light touch if you’re happy with how things are progressing
On the other hand, dealing with these functions in-house means you’re more responsible for them so need more oversight on issues that come up
All this can pull your focus away from your primary business function and goal and put you at risk
Access to more talent
Although remote working has opened up the talent pool for many businesses, this is very role specific.
Most businesses are still reliant on the talent pool within their local area.
Which can be limited.
Outsourcing opens your business up to a much wider pool of expertise and help you find the services you need to improve your business.
You don’t have to hire people
When you outsource functions you don’t take on the costs associated with hiring staff like salary, holiday and sick day, and tax, or the admin that comes with having employees or training.
You simply pay for the expertise you need and judge the level of service on the results you get.
What are the downsides of outsourcing for your business?
You could lose some control
One of the key reasons some business owners are reluctant to outsource anything in their business is because they fear losing control over a part of their business.
This is understandable if you’re outsourcing a customer facing function like customer service or marketing.
How your outsourced business acts reflects on you.
But this is why you need to do your research to make sure you end up with the right provider with the skills and experience to match the service you expect.
Remember that your outsourced company’s reputation is hanging on their service too.
Just think of the benefits you’ll get when you don’t have to worry about managing that part of your business as closely anymore.
Sometimes, you might take on an outsourced company and suddenly find yourself facing costs you weren’t expecting.
Maybe they had a minimum monthly fee you weren’t aware of, or higher fees if you surpass your monthly quota for services.
But again, this comes down to the research you do beforehand and you should always be clear with your service provider exactly what fees you’ll be paying per month and what extras might come up.
Security risks are usually associated with IT service providers who might be managing sensitive commercial or customer information online.
But you should always consider the privacy or security risks that come along with hiring a third party provider.
If they’re a customer facing function, like telephone answering, are they understanding of privacy requirements or confidentiality as it relates to the clients and customers they’ll be dealing with?
You should always consider how privacy or security will fit into your outsourcing.
This is one of the biggest concerns business owners have when it comes to outsourcing, especially for customer facing services.
How can you monitor the quality of the service coming from your outsourced provider, and what impact is that service having on your own reputation?
Checking previous testimonials and case studies is one way to judge the level of service you’ll get.
But do they have any means of demonstrating success to you during the contract?
For example an outsourced marketing agency should be able to demonstrate the amount of leads they’re generating for you.
Or a telephone answering service should be able to provide full call recordings so you can listen and judge the quality of the service you’re getting.
If your potential partner struggles with proving the quality of their work, maybe reconsider.
Disruption when you change providers
There’ll come a time when you and your outsourced service provider will part ways.
Hopefully it’s on good terms.
But while relationships can last a long time in business, sometimes you’ll need to move to a new provider simply because your existing service got stale and you needed a change.
So what will happen when it does come time to part ways?
Will there be any penalties if you decide to leave before the end of your contract?
Will you get any support in transferring the service over a new provider or will you have to manage it all on your own.
It’s worth asking the question.
Lack of flexibility with some providers
One of the benefits of outsourcing resources to a third party is that you should get some flexibility with the resource.
If you’re busy, you can pay more fees and get a higher level of resource.
When you get quiet, you can scale down the resources you need and pay less.
But not all third party providers are this flexible. So make sure you check what your service agreement is and that you have the flexibility you need built in.
If it’s not, then you should definitely reconsider.
For example if you use a telephone answering service, can you adjust your contract to a lower level during off peak periods, for example during seasonal lulls?
How to decide what to outsource
Business outsourcing isn’t just a case of picking a business function you don’t particularly want to deal with, and finding someone else to deal with it.
You have to approach outsourcing strategically and with the purpose of improving your business.
When investigating what functions to outsource, there are some key considerations.
In terms of understanding what’s required within your business, the key questions to ask are:
What resources do you need?
Do you need someone to come in and take over a complete function, or do you just need help with overflow during busier periods?
Understanding this will help you find the right provider and also prevent you overpaying for excess services you don’t need.
What’s your cash flow like?
While you shouldn’t skimp on your outsourcing (you get what you pay for) you don’t want to outsource a function that will then put your cash flow at risk.
Review your current cash flow carefully and use this as a basis for what you can afford.
It’s worth considering that your outsourced services should free you up to focus more on revenue generation.
So you should consider the increased revenue you’d expect to generate and compare this to the costs of outsourcing.
What business processes do you have?
Understanding your current business processes and how they’re operating will help you figure out which services you need to outsource.
And it will also help you prioritise that outsourcing if you need to outsource more than one thing.
For example, many businesses automatically choose to outsource their finance and accounting simply because they don’t have the skills.
But you should also look beyond the more obvious functions.
Telephone answering is an often overlooked area for outsourcing that can bring many benefits (which we’ll go into later).
What suppliers are available?
Finally, you need to thoroughly review the suppliers that are available in the areas you want to outsource.
Some areas you’ll find are saturated with suppliers.
There’s no shortage of accounting and marketing firms to outsource to.
Other functions are more specialised, so you might need to do a bit more digging into who’s available.
Once you understand these factors, you can start to think about your outsourcing options.
At this point the questions become:
Should you outsource some or all of the work?
This falls within your resource planning that we mentioned before.
For example you might be able to deal with the majority of the calls that come through to your business.
You just need some additional resource to manage the occasional overflow, or to introduce evening and weekend call answering.
On the other hand, you might be completely overwhelmed with the volume of calls coming to your business and need an outsourced telephone answering service to manage every call coming to your business.
What difference would outsourcing make to your bottom line compared to hiring in-house?
Measuring your ROI of any outsourced service is always going to be key in deciding whether it’s worth bringing in outsourced services or just hiring in-house.
Sometimes, it might make sense to hire internally if the cost of salary, pensions, tax etc are lower than the costs of outsourcing.
This very rarely happens though and you’ll often find that the outsourcing fees are substantially lower than hiring in-house.
Or, they provide much better value.
For example spending £3,000 a month on a marketing agency might sound a lot, but you’re paying for the expertise and time of a full team who can manage every part of your marketing from web development to SEO to content writing.
Compare that to a £3,000 a month salary for a marketing executive who is just one person and might not have the same skill level, and you can see why the agency is a good investment.
Similarly, hiring a receptionist to deal with phone calls can easily cost upwards of £30,000 a year in salary, plus tax, pensions, sick and holiday pay and the other associated costs and admin.
Compare that to a dedicated call answering service that either charges for a set time a month or by minute, and the costs of outsourcing your telephone answering is substantially less.
What would happen if you did nothing?
Finally, you need to ask yourself what if you didn’t outsource and simply carried on as normal.
What would the risks be if you continued to struggle managing resources in-house rather than making the investment in experts who could help your business.
How would that impact your ability to create a more agile business?
And how would that impact your ability to adapt to the challenges you’ll face in the future?
Self Assessment: Questions to ask when considering outsourcing…
We know we’ve just given you a lot to consider and now you’ll need to go away and review your outsourcing strategy.
To make it easier, here is a quick template of the key questions you ask yourself:
- What am I looking to achieve?
- Is it simple enough to outsource?
- Will it cost more?
- Will it benefit my bottom line?
- Will it improve service?
- Can I monitor and manage it?
- What will it need in terms of preparation?
- What would my customers think?
- Is there another way?
What business processes should you consider outsourcing?
There are some business processes that have historically been, and remain, ideal for outsourcing just because of their nature.
Here’s a quick run through the most common that you should consider outsourcing straightaway:
Outsourced Payroll & Taxes
Most businesses outsource their finance roles to third party providers because most business owners, especially small business owners don’t have the expertise to deal with these matters.
They also don’t have the time to dedicate to taxes when they need to keep their revenue coming in.
Bookkeeping and accounting fit perfectly into the outsourced model because they’re a specialist skill that can be subject to yearly increases and declines in usage. For example you don’t submit taxes every week so it doesn’t make sense to have an accountant full-time.
Outsourced Human Resources
HR is a critical business function and sometimes it can be beneficial to keep this in-house for serious cases.
But for the most part, HR can be effectively outsourced because it takes a huge amount of time and administration off your hands so you can focus on revenue generation and customer services.
Often that time saves is well worth the ROI.
Plus, although you can outsource HR through business organisations like the Federation of Small Businesses or your local Chamber of Commerce.
Outsourced IT support
IT is arguably, along with accounting, the most outsourced function in business.
It’s a constantly changing area of expertise that requires specialist knowledge and understanding that most business owners can’t be expected to understand (especially when it comes to cyber security).
This makes it a prime candidate for outsourcing. Plus, you can hire an IT manager for a few hours a month when something goes wrong.
Marketing is seen as a contentious area by some business owners when it comes to outsourcing.
Mostly it’s because many business owners worry that an external marketing agency won’t be able to communicate the company’s message or USP as well as an internal resource could.
And there’s some validity to that thought.
But bringing the same level of marketing expertise and execution in-house is incredibly expensive compared to outsourcing to an agency.
While you could spend £30,000 on a marketing executive, they’ll likely won’t have the depth of knowledge of web development, SEO, PPC, content creation and marketing strategy that you could get for the same amount with an agency.
Seasonal agency support
If you have seasonal peaks or the need for temporary support – like if you run and manage events, then you’ll likely benefit from the support of an agency that can supply temporary staffing.
This is much more effective than hiring a team of full-time staff who you only use properly half of the year.
Telephone answering service
We’ll go into more detail on this one later, but with the changing way we work and the adoption of remote working and the lesser reliance on an office and fixed reception, call answering is increasingly becoming a cost effective, and popular function to outsource.
What processes should you keep in-house?
Not all outsourcing is good.
And there will be parts of your business that you absolutely need to keep under your control.
You may be able to outsource some roles within some of these functions, but for the most part having the internal expertise is the important consideration.
So here’s what you SHOULDN’T outsource.
Core competencies refer to the primary service your business offers. These are specific skills that relate to your business and require deep knowledge that you couldn’t get from a third party.
For example, if you run a garden centre you might bring in an agency worker to work the tills over the summer, but you wouldn’t outsource the main role of a grower or gardener.
Or a dermal filler who evens out wrinkles might outsource their call answering and diary management, but they’re not going to outsource the work itself.
Every business will go through challenges and issues. And it can be easy to try and shoehorn an outsourced provider into your company to try and deal with the problem for you.
But outsourcing fundamental business problems to someone else rarely solves them because they’ll be so specific to you.
Sure, you can bring in expertise to lean on and ask questions, but you need to come up with the ultimate solution about your own company.
Sure, you can outsource some functions of HR like holiday booking.
But when it comes to the serious HR issues like conflict resolution or serious allegations between employees, you need to keep decisions in-house.
Yes, you can bring in specialist advice, but simply outsourcing the problem to someone else can come back and bite you later on if you’re deemed to be ignoring serious problems in your own company.
Managers & key personnel
Managers aren’t the best to outsource.
You really need key personnel in your business who understand the way the business works and its direction so they can watch over your business and what is happening.
We all believe as business leaders that we understand and know our businesses best, likewise key positions in management learn from us over time and reflect our goals and ambitions, so consider this carefully.
When the cost is significantly more than employing the resource
And of course lastly if you need to outsource a role or task and it costs you more to outsource than employing someone yourself, this again needs to be considered carefully, if it is just short term maybe, long term probably not.
Consequences of not outsourcing
As your business grows, and you become busier, you’ll find yourself being dragged from task to task, problem to problem
The danger with trying to manage everything yourself, is that your focus will become too split and you won’t accomplish anything particularly well, if at all.
Similarly, bringing competencies and functions in-house might seem like you’re delegating, but now you’re responsible for overseeing those functions and managing the people behind them.
That includes the associated admin of dealing with holidays, sick pay, recruitment, HR.
Do you really want all that?
Especially if you’ve started your business to focus more on delivering the services you have expertise in?
Rather than delivering services you’ve become a slave to your business.
Outsourcing can take this away.
How to choose the right outsourced vendor
OK, so now we understand the types of functions you could outsource and the pros, cons and consequences of not outsourcing, how do we find and choose the right outsourced service?
Here’s some key things to consider:
What do you need from your outsourced vendor (do their services match your requirements)
Be very specific here as this will determine whether you’re getting the exact service you need.
Saying you need telephone answering support is fine.
But what kind of support do you need?
What level of support do you need?
Are you working in a particular niche where a specialist call answering service would be more beneficial?
These are all important things to consider.
Can they deliver? Any case studies or testimonials?
Oftentimes the only way to find out whether an outsourced provider can deliver is to hire them.
But you can get a good idea about the level of service you can expect based on the company’s testimonials and case studies.
Check things like Google reviews to understand what similar customers thought about the service they received.
Or check your supplier’s website for reviews, testimonials and case studies.
If they don’t have any, it could be they’re just a new company.
Or it could mean their service isn’t good.
What specialist experience do they have?
Within your particular industry there will always be areas of specialist knowledge and skills.
If you need a particularly niche skill, can your outsourcing partner deliver or are they more of a general supplier?
This will help you determine the provider you bring in – although it could also affect the price.
What are their contract terms?
Before you sign up to any third party supplier, make sure you understand exactly what you’re signing up for.
This doesn’t just include the services you’ll get, but any clauses in your contract that could bite you later on.
For example, do they have a minimum service level that you’ll be charged?
Do they have an automatic renewal period for services that you need to be aware of?
Or what’s their terms for early cancellation of services?
How flexible are they?
Much like the contract terms, understand how flexible the level of services are that you can get as part of your contract.
Are you signing up to a fixed monthly service, or is their flexibility in the service levels you can get from month to month?
For example, can you scale up for any seasonal peaks?
Do they offer ‘full service’ functions?
Depending on the business function you’re outsourcing, their might be several functions that sit under one umbrella.
Marketing is a prime example with “marketing” encompassing all different kinds of services from content to SEO to PPC.
If they offer a full service and you need more than one, it might be worth investigating the costs of bringing more services under that third party to save on admin and potentially bring costs down.
But beware any provider who tries to take over as many functions as they can.
The best outsourced service providers understand the benefits to you of keeping some services in-house and won’t just try to take as much of your money as possible.
Why telephone answering is a prime outsourced function
We’ve already spoken about this a bit, but telephone answering is a business function that is now primed for outsourcing.
In truth, it always has been.
But with more businesses ditching offices and physical receptions, it’s making less sense to have a full-time member of staff purely to answer the phone.
Particularly when you consider that full-time receptionists can cost between £18,000 and £30,000 a year in base salary.
Plus all the benefits, taxes and admin that comes with having a full-time or part-time receptionist.
Not to mention, once your receptionist has answered the phone, they can’t answer it again or deal with a customer until they’ve put the phone down.
And any business owner will know that calls rarely come through one at a time.
A virtual telephone answering service can solve this call answering problem, without lumbering you with all the costs.
A call answering service can make sure you never miss an incoming call.
They can take messages and send them immediately to the relevant person in your company – or automatically forward emergency calls to you.
They can also act as a screen between your busy employees and unsolicited sales calls that take them away from value adding, revenue generating tasks.
Plus, if you need additional support with admin tasks like diary management, you can use your telephone answering service or virtual receptionist to help you manage this too.
Contact Face For Business for the best telephone answering service
Want to start seeing the benefits of outsourcing your business’ telephone answering service that can easily deal with customer enquiries when you can’t get to the phone?
At Face For Business we’re trusted by hundreds of businesses to deal with their customer calls and provide our virtual receptionists to deal with other tasks like diary management and meeting bookings.
Stop worrying about missing and calls while you’re running a business and invest in an outsourced telephone answering service.
04th November, 2021
Posted by Face For Business