Outsourcing – or not
January 10, 2019
By Beki Fraser
Finding all the people you need with the skills you need when you need them is challenging. Growing your business sometimes requires you to evaluate whether you hire directly or outsource for talent.
You reach a fork in the road and two paths are before you. You choose to find the talent directly or to outsource an operation or function. When is it right to outsource? In making that decision it isn’t solely about cost, it involves your business position, your growth goals and your talent.
Know what drives your customers to you and keep that in house. This goes beyond, “We offer the best product or service offering…”; it extends to the adjacent functions. When your company leverages and analyzes highly sensitive data, would you outsource your IT security function and leave that exposure in the hands of others? Maybe not.
When your staff is working on tasks or activities related to the business’ competitive advantage, it’s a higher return on investment. Even if they are qualified to do all the work, consider if it’s the best use of their time. Outsourcing is reserved for the non-core business activities. It’s important to recognize that non-core is still important and managing an outsourcing process is critical.
Know the key skills for growing your business. In a growing business, you need to delegate more to others versus doing. Spend your resources, including time, talent and money, on your most important things and consider outsourcing the others.
In making the choice, think about the skills needed inside the organization. Exploration outside your competitive landscape may warrant reliance on external resources to test the water whereas moderate expansion within your core business areas may be best managed by direct hiring. Some internal activities, like payroll, are time-consuming repetitive tasks that when outsourced give you or another leader space to take on higher impact responsibilities.
Know your culture and its future. An organizational pattern and flow exists as people and processes are functioning today. Evaluate the resilience to change in your culture. Staff has deeply rooted habits based on current process or workflow. How well can you build the case for changing those habits?
A majority of change management initiatives like outsourcing fail as established work patterns remain firmly in place. It’s a case by case analysis of how well the people involved will adapt to the changes brought on by outsourcing. Outsourcing requires intentional strategies about how people will interact with one another and how work will be completed. Employee behavior does not always mirror hierarchy and when did “because I said so,” ever work? The planning not only guides the decision, but also builds buy-in as you involve those whose behaviors you may want to shift.
Choosing to Act
There is no recipe for outsourcing that dictates when, what and why it gets done. Your business is a unique entity and your knowledge and respect for the nuance will drive you toward the right choices for you. If you decide to outsource and are ready to take action, consider what you do know about the HOW.
Scope and Standards of Work
Defining the expectations and standards for an outsourcing engagement is critical. You are still accountable for the work getting done and your reputation is still on the line. This goes beyond what gets done by when and also includes how the businesses interact. Avoid micromanagement and strive for clarity.
Outsourcing does require a defined range of flexibility where things can move and evolve naturally. Identify in advance what calls for revisiting the relationship versus what is worthy of specific review. Much like planning in advance about how a relationship may end, it’s important to anticipate how and when it may need to change.
Managing Internal Change
As you read earlier, change initiatives don’t have a high success rate. The strategy for success is reinforcing communication with a compelling message. Your team will adapt to a different workflow when they understand, see the need and feel the change is important. Communicate effectively while gaining buy-in by involving them in the process and truly listening to their perspective.
While there is no recipe for outsourcing decisions, there are some clear ingredients to have in your mix. Acknowledging your competitive advantages and nurturing them internally will keep them fresh for your customers. Focusing on your strategies for growth and evaluating core business versus exploratory business ventures. Your people are your greatest asset may sound cliché and yet aligning that talent with the organizational goals—whether inside or outsourced—lays the foundation of your success.
The big question is: When you arrive what path do you take?
Beki Fraser is the founder of Focus For Growth, LLC, a business and leadership coaching practice. Her purpose is to cultivate confident and conscious choices for those building a business or a career. Beki has an MBA from Yale School of Management and holds an ACC credential from the International Coach Federation (ICF).