How to Decide What to Outsource: 9 Criteria for Entrepreneurs

In business outsourcing has become a game changer. It offers businesses the opportunity to focus on their core competencies while utilising external expertise for non-core functions. But how do businesses choose what to outsource?

1. Identify Non-Core Functions

Start by identifying tasks or processes that are not central to your company’s core competencies. These are the areas where outsourcing can provide the most significant benefits. Core functions are what make your business unique and set you apart from competitors.

If you run a software development company, coding and software design are your core functions. Tasks like customer support or bookkeeping may be non-core functions suitable for outsourcing.

2. Assess Cost and Savings Potential

Evaluate the costs associated with performing a particular task or process in-house versus outsourcing it. Outsourcing can often be more cost-effective, especially for functions that require specialised skills.

Consider a small marketing agency. Hiring a full-time graphic designer may be expensive, whereas outsourcing graphic design projects on platforms like Fiverr can provide high-quality work at a lower cost.

3. Analyse Skill Requirements

Determine the skill set needed for the task or process in question. If it requires expertise or technical skills that your employees lack, outsourcing to professionals with the required skills is a smart choice.

Let’s say you operate an e-commerce store and want to optimise your website for search engines. Outsourcing to an SEO specialist can yield better results than attempting to learn and implement SEO strategies in-house.

4. Consider Scalability

Think about the scalability of the task or process. If your business is experiencing growth, outsourcing can provide flexibility by allowing you to scale up or down as needed without the constraints of hiring or layoffs.

A startup in the tech industry may outsource customer support initially to handle inquiries. As the business grows, they can scale up support by increasing outsourcing without hiring and training additional employees.

5. Time Sensitivity

Some tasks or projects have time-sensitive deadlines that require immediate attention. Assess whether your in-house team can meet these deadlines efficiently. If not, outsourcing can help ensure timely delivery.

Imagine you’re organising a product launch event for your tech startup, and you need promotional materials designed within a short timeframe. Outsourcing the design work to professionals can help meet the tight deadline.

6. Evaluate the Learning Curve

Consider the learning curve associated with certain tasks or processes. If it takes a substantial amount of time for your employees to acquire the necessary skills, outsourcing may be a quicker and more efficient solution.

Suppose your company decides to implement a new accounting software system. If your finance team is unfamiliar with the software, it may take months to become proficient. Outsourcing accounting services can offer a more immediate solution.

7. Assess Risk Tolerance

Evaluate the level of risk associated with outsourcing specific tasks or processes. Some functions may involve sensitive data or critical operations, making in-house management a safer option.

A law firm may choose not to outsource legal research and document drafting, as confidentiality and accuracy are paramount in the legal profession.

8. Cultural Fit and Communication

When outsourcing to external providers or freelancers, consider factors like cultural fit and communication. Effective communication and alignment with your business’s values can significantly impact the success of an outsourcing partnership.

If you’re a tech startup, working with a software development team in a different time zone might pose communication challenges. However, platforms like Fiverr often provide tools to facilitate communication and collaboration.

9. Regulatory Compliance

Examine whether the task or process you’re considering for outsourcing has specific regulatory or compliance requirements. Ensure that the outsourcing partner is well-versed in these regulations to avoid legal issues.

If you run a healthcare-related business, outsourcing patient data management should be done with utmost care, ensuring compliance with healthcare privacy laws like HIPAA.

Deciding what to outsource is a strategic decision that can significantly impact your business’s efficiency and bottom line. By following these criteria and considerations, entrepreneurs can make informed choices about which tasks or processes are best suited for outsourcing.

Remember that outsourcing is not a one-size-fits-all solution. Each business is unique, and the decision to outsource should align with your specific needs and goals. Whether you’re turning to platforms like Fiverr or engaging with specialised service providers, a thoughtful approach to outsourcing can lead to enhanced productivity, cost savings, and overall business success.