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The positives and negatives of outsourcing work for SMEs

Why might outsourcing work be good for a small or medium sized enterprise?

In challenging economic times small and medium sized enterprises (SMEs) have to look at costs and reduce overheads in virtually every area possible. One of the first things that small businesses look at in order to free up time and resource is to outsource work in order to focus on other aspects of their organisation.

Outsourcing of work can have a hugely positive impact on the output and growth of an organisation.

However the decision to outsource important work to freelancers and professionals across the country and overseas should not be made lightly. It is important to outsource work for the right reasons rather than employing someone in-house to complete the task.

There may be times in business in order to progress that you will take on projects that you just don’t have the necessary skills to do so. Outsourcing enables SMEs to improve their specialised skill sets via third parties, to improve their reputation and get the job done quicker.

Here are some of the many other pros and cons of outsourcing work that businesses must consider to determine whether it is the right option for your organisation.

Pros:

  •  Increased speed and quality of delivery – If your business is willing to take on work in areas which you don’t particularly specialise then outsourcing work can significantly enhance the speed and quality of completed work. Not only will you be able to complete work on time and within budget, you will be able to focus your energies on other pressing projects better suited to your expertise.
  • Free up office space – Space is precious in commercial properties and by outsourcing work within a particular department you can minimise the number of workstations and employees required, with the ability to communicate and work with third parties online with minimal fuss.
  • Ideal for business start-ups – In the infancy of any business outsourcing work proves significantly cheaper than hiring full-time staff with the same level of support. However, as businesses grow it is prudent to re-evaluate the outsourcing of particular tasks as it may prove more beneficial to employ a full-time employee to work in-house and adapt to your growing and changing needs.

Cons:

  •  Concerns over quality control – Many small businesses are frightened to work with third parties as they lose the ability to manage projects in-house. This can have a significant impact on quality control, particularly if you make a poor choice of freelancer to complete a specific project.
  • Communication frustrations – If you choose to outsource a task overseas there is always the risk of work demands getting lost in translation. This can lead to hold ups in work which may result in frustration from clients and potentially the end of lucrative working relationships.
  • Difficulties selecting appropriate vendors – SMEs inexperienced with the process of selecting a freelancer or professional for outsourced work may find it hard to decipher reliable proposals from the downright shady.

Unfortunately outsourcing work is not an exact science, but with a little common sense and research you can work successfully with third parties with the necessary knowledge and work ethic.

0 replies on “The positives and negatives of outsourcing work for SMEs”

I guess the best thing about outsourcing is that you would have great control of your budget. I’ve seen businesses who were able to trim down their cost because of outsourcing some of their work. But the downside of it is you don’t have full control of the works of all your outsource employees. So you can really rely on the quality of their work.

I agree Samantha that you will have greater control of your budget, but whether or not it is more economical and practical is ultimately decided by the project itself.

I am currently outsourcing 2 departments, however, I find it is more expensive to outsource the individual jobs, but it is more convenient to do so at this time because we don’t have the right infrastructure to handle the growth of these departments yet.

Well, I think that quality has always been the concern in outsourcing. Last year, I tried to outsource one of my SEO campaign. It was all going great and I was paying low. But when I checked all of their work, I was disappointed. So I decided to end our contract and do it myself instead.

I think it really depends on the nature of the work and who you are paying to do it for you. As Andrew said, there are both positives and negatives 🙂

Thanks for the comment, welcome to the blog!
Christopher – Admin Team

The important bit is to understand and analyze the opportunity cost of any required service. With that in mind, a start-up or an SME can decide which work can be outsourced and which can be done by themselves.

Basically it depends on the scale of the project and the size of your business 🙂

I see you are on about.me Arjun. Why not check out our article on about.me and share your profile 🙂

Thanks for taking the time to comment, welcome to the blog!
Christopher – Admin Team

Outsourcing could be great as long as you get what you wanted, quality over quantity but sometimes some outsourcing companies just provide quantity with not so good in quality that may affect your reputation online. kinda creepy to think that you’re paying to make your business go down instead of ranking up. So I manage to do SME work first hand, just to assure. Well, I’m not saying that all of them are not working well, that’s why great research before investing into something is really necessary specially when it comes to business marketing concerns

I know what you mean Marlo, make sure you have the right people doing the work for you, or they could do more harm than good!

Thanks for commenting Marlo, welcome to Technology Bloggers 🙂
Christopher – Admin Team

Good to here Marlo, if you like our blog, why not subscribe to our feed?
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What a lot of people tend to overlook when outsourcing is the amount of time it will take to manage the outsourced roles. Just because you are shifting the work to someone else located somewhere else doesn’t mean that it will all happen the way it should.

As you have quite rightly pointed out there are pro’s and con’s to outsourcing and the individual SME needs to weigh them up to determine if outsourcing works in their situation.

I guess many people forget that when you outsource you need to provide direction and focus, or else the work you get back may be sub-standard!

Neil is absolutely spot on that outsourcing work does not simply mean you are shifting the responsibility of work onto a third party. There is still a need for SME owners to take charge and ensure work is provided at an acceptable level, on-time and under budget.

A reliable communications system is required, whether that is Skype, email or an online community.

I have had good and bad situations when it comes to outsourcing. I do think that communication barriers played a factor in some of the circumstances but others went quite well. I kinda see it as a crap shoot, and it’s best to try and use a company or person that someone you know has worked with, then you decrease the chance that their will be problems.

I think you can get big without outsourcing Jack, but it just takes a lot longer!

Thanks for the comment, welcome to Technology Bloggers 🙂
Christopher – Admin Team

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