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Employees. Who Needs 'Em?

Should you outsource everything?

Q: I'm starting a business. Should I outsource everything?

A: Don't outsource the unique skill or product that you bring to the business, but everything else is fair game. "Outsource as much as possible," says Bruce Judson, senior faculty fellow at the Yale School of Management and founder of thecostsavingsguy.com, a site that recommends web-based outsourcing applications for business owners.

"You should be working on the business, not in it, and a good service frees up time for you to focus on what you do best," Judson says. Paying dearly for a custom job may meet your current needs, but it will also require additional costs for upgrades and maintenance, and more importantly, will soon be out of date.

On the other hand, an application that meets as little as 60 percent of your (noncritical) needs will be good enough. "You might lose a little productivity at first, but eventually, that service will improve and features you can't even imagine will be added," Judson says. "It will be 80 percent of what you need in six months, and 120 percent a year from now." And it will be far cheaper, too.

A few words of warning: Evaluate the credibility and longevity of the outsourcing company and always have short-term backup and long-term replacement plans up your sleeve. Outside of that, consider outsourcing the one exception to "too good to be true."

Jennifer Wang is a staff writer at Entrepreneur magazine in Southern California.

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This article was originally published in the March 2010 print edition of Entrepreneur with the headline: Employees. Who Needs 'Em?.

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