Struggling to find ways to redistribute tasks once held by
laid-off full-timers, business owners are taking a renewed interest
in outsourcing. Even those in less dire straits are considering it
as a way to focus their businesses on core competencies. According
to Input, an Internet market research firm, the business process
outsourcing market will reach $34 billion by 2004.
"The reason you outsource is you get [services] better and
faster and cheaper," says Peter Bendor-Samuel, founder and CEO
of the Outsourcing Center, an online resource for businesses,
and author of Turning Lead Into Gold: The Demystification of
Outsourcing (Executive Excellence).
Not sure where to begin? Check out these popular outsourcing
candidates:
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Payroll: Payroll,
with its complex tax implications, is the most commonly outsourced
business process. Input estimates some 47 percent of businesses
will outsource payroll services by 2002.
In addition to calculating wages, payroll companies adhere to
current tax obligations, print and deliver checks, and provide
management reports. They also save you from having to continually
update your payroll software to meet current laws.
Human resources: Typical HR
services include benefits, recruiting, wage reviews, compliance and
risk management (workers' compensation, dispute resolution and
office policy-making). Costs, which vary depending on the number of
employees and options you choose, shouldn't be the only
concern. Because HR services often play a big role in hiring, look
for a company that understands your company culture.
Finance and accounting: You can
outsource tasks as basic as bookkeeping or as complex as auditing
services and tax planning. Outsourcing accounting also affords you
state-of-the-art software and often faster response time than an
internal accounting department can provide.
Information technology: If you
just need someone to troubleshoot periodically, outsourcing is a
good solution. Of course, suppliers can do more. In addition to
overseeing networking, backups, redundant hardware and hack
prevention, some suppliers even provide entire hardware and
software systems. Just make sure your contract guarantees security,
confidentiality and high availability.
Outsourcing Challenges
In 1994, three years after he started his public relations
agency, Steven Blinn, principal of New York City-based BlinnPR,
decided to outsource his accounting and billing to free up time for
building business contacts. The strategy worked. Blinn has expanded
his agency into a 12-person firm that draws $1.2 million a
year.
Blinn, 35, admits that staying in touch with his service
supplier presented a big challenge. "You just can't tell
someone 'Here's your function; go do it,'" Blinn
says. "I don't like surprises." He now communicates
constantly with his supplier, establishing specific checkpoints to
gauge progress toward their goals.
Bendor-Samuel, however, advises entrepreneurs against
micromanaging service providers. "The mistake people make when
they get into outsourcing relationships is they start changing how
the supplier does things," he says. "When you change how
the process works, you're destroying all the leverage
outsourcing gives."
Your contract should set down logistics, costs and service
requirements. Also, clearly state the level of service you expect,
including rewards and penalties for above- or below-average
performance.
Outsourcing partners often rework the way a process is
completed, allowing you both to focus on what you know best. And in
these days of streamlining, that means a lot.
Mie-Yun Lee is the editorial director of BuyerZone.com.
Kaukab Jhumra contributed to this article.
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