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When to Outsource Your Business and, More Important, When Not To

By: Aaron Lee


When to Outsource Your Business

Outsourcing your business is an option which many contemporary professionals are pursuing, namely because it helps them cut costs while optimizing their operations. Still, outsourcing is usually easier said than done, and many entrepreneurs and business managers are struggling when it comes to actualizing the outsourcing plans they’ve made.

Stop trying to blindly guess when to outsource and start doing some research instead. Here’s how to ascertain when it’s time to outsource your business, and what steps you should follow if you hope to truly lower the costs of doing business while simultaneously producing better results for your company and its clients.

It’s not always time to outsource

The first thing you need to know about effectively outsourcing your business is that it can only be done properly when it’s the right time to do so. Many businesses outsource at the wrong time, and clog up their operations or even shutter their windows entirely thanks to the ensuing complications. You should always thoroughly review all of your options before ultimately deciding to outsource, because while it’s an increasingly popular and effective business strategy it’s still no one-size-fits-all solution to any problem that ails you.

Now that you’re confident it’s truly time to outsource, you can begin by analyzing your business to determine which areas need outsourcing the most. Some portions of your company will be irreplaceable, and you may hamper your ultimate profitability by outsourcing them, whereas others will be ripe for outsourcing. International operations are deeply complex, but globally effective enterprises are always similar in that they only outsource in areas where it’s beneficial to do so.

For starters, you should realize that you need to outsource work instead of leadership using a company that provides business processing outsourcing (BPO) services. If your managers and those charged with keeping your company on track are outsourced, you’ll soon find your operations loosely ran and in dire need of structure. Never let yourself make the mistake of outsourcing leadership, and instead focus on low-level functions that can be wholly automated or outsourced to cheaper markets.

Though it’s not always time to outsource, you’ll know that the time has finally arrived to do so when your business is struggling to compete despite successfully digitizing its operations. Many businesses try to skip the modernization process altogether, disincentivized by the investment and labor which that entails, and instead try to outsource their problems away. Only after you’ve refined your domestic operations and made them as efficient and tech-driven as possible should you look to outsourcing as a solution to any business dilemma.

Find the true drivers of value

To outsource effectively, you need to find the true drivers of value in your business. If your rank-and-file workers are where much of your profits are derived from, then outsourcing them is a surefire way to guarantee your business collapses overnight. Outsourcing needs to be opportunistic, probing for areas of weakness in your company that it can shore up by finding a more effective source of labor or capital overseas.

Never allow yourself to wantonly engage in outsourcing for its own sake, as doing so is a guaranteed way to cripple your company’s long-term potential. You should focus outsourcing rank-and-file positions away when they’ve gotten to the point where you can digitize them no further, as relying on outsides to accomplish any business task is always risky.

Still, sometimes outsourcing is necessary and will deliver tremendous results for your business. To make sure that you only outsource when needed to, be sure to always be opportunistic in your approach to outsourcing work and guarded in which vendors and outsiders you choose to do business with.

Published: December 14, 2018

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Aaron Lee

Aaron Lee is a serial entrepreneur, investor and philanthropist. Since the age of 17, he has started and sold five businesses before creating Dash Serviced Suites--Hong Kong’s fastest growing asset-light, tech-enabled, serviced apartment community operating over 100 apartments. Aaron focuses on investing in technology to build industry disrupting startups.

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