5 Questions to Help Decide If Outsourcing Is the Solution

Determining whether a problem should be solved by your team or through outsourcing requires careful analysis.

learn more about Asha Saxena

By Asha Saxena

Opinions expressed by Entrepreneur contributors are their own.

Asking what tools you should use to solve problems and optimize your business is a bit like asking how you can make your life better. There are endless possibilities. It all depends on what you want, what your values are and what particular problems you're experiencing.

Companies are constantly facing the choice between buying tools and building customized solutions. And now, a third option is available: the "do it for me" option, in which your company's function or problem is entirely outsourced to another company.

The DIFM revolution has already changed the way we buy. Now, we can pay for complete services such as all-in-one printing and publicity for our self-published books. The same trend is also revolutionizing how we conduct business. Outsourcing solutions can offer a quicker turnaround and a cleaner long-term result. Companies that "do it for you" will often work to a tighter deadline and deliver a more professional finish than your in-house teammates, who may not be experienced enough to solve this particular problem.

But even as the DIFM trend gathers momentum, you need to keep in mind that building and buying are still solid options. You can figure out which method is best for you by using a five-step interrogation:

1. What's my problem?

The best tool for your business depends entirely on the specific problems you need to fix. Do you need a solution for payroll, marketing or in-house operations?

Sit down with your team, and critically analyze what you need to achieve and the most important facet of your problem. Let this factor drive your decision. If you need a solution quickly, building a customized tool from scratch becomes a less attractive option. If you need to save as much money as possible, that affects your choice, too.

Related: 6 Tips to Assess Problems, Find Solutions

2. Who do I know with insight into this problem?

Once you've identified your unique needs, reach out to network experts with specific goals in mind. Sift through your contacts to find people who might know of some options you haven't thought of to give you the best chance of making a fully informed decision.

3. When do I need this solution, and how soon do I need it to pay off?

When you analyze the problem or function you need to solve, a sense of urgency should become clear. How soon do you need to see the ROI from the tool?

For example, if you're looking for a system to generate invoices, you'll probably need that tool ASAP. Otherwise, your company won't get paid. A system that tracks employee performance, on the other hand, might be less time-sensitive and benefit from a holistic solution that you can build from scratch.

Related: 5 Signs That It's Time to Outsource Your Marketing

4. What percentage of my needs will be fulfilled by this method?

A good rule to follow when deciding whether a solution works for your company is the "80 percent rule." If you're browsing tools to buy and calculate that 80 percent of the initial problem is solved by that tool, buy it. If you're looking at a lower percentage (meaning you would have to significantly supplement the tool yourself to meet that 80 percent benchmark), it's probably wiser to build something or outsource.

5. Are there any byproducts that could make this decision easier?

Companies often forget that when they employ one tool for one problem, it may aid other functions or remedy other problems that it wasn't initially designed for. This byproduct value can potentially upgrade a "70 percent tool" to an "80 percent tool," making it worth the investment.

Sometimes, it's hard to gauge when you should build, buy or join the DIFM bandwagon. But don't be intimidated by this trinity of tech solutions. As long as you know what your needs are, wise up about the array of options available and remember the "80 percent rule," the most efficient solution for your company will become clear.

Then, you can start focusing on the next problem.

Related: Hold the Phone! Don't Outsource Customer Support Just Yet.

Asha Saxena

President and CEO of Aculyst Inc

Asha Saxena is Columbia University Professor and founder of Aculyst Inc. a healthcare big data solutions and advanced analytics services firm


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