Features

How Outsourcing Non-core Services Can Make A Difference?

Pooja Kumar
Apr 2011
Over the course of my association with SMEs for about a decade, I have always come across the lack of conviction among SMEs owners while outsourcing their business processes. And it continues to perplex me. SME owners often hire employees to do the most mundane of tasks which can be easily outsourced.

In fact, outsourcing non-core processes and services can be more good than bad for a SME. The biggest benefit of outsourcing non-core services for a SME is the benefit of time. It has been seen that a large percentage of start-ups fail in the first five years of their inception. The two major factors contributing to this phenomenon are the lack of a cohesive business planning and occupation with too many tasks at the same time on the part of an enterprise which unnecessary leads to “attention diffusion.”

A typical case in this context is that of The Writing Lab, a content writing firm, a traditional small enterprise with no hierarchy with an owner-centric structure in place. Being a start-up, the owner of the firm, Vaibhav Batra, was grappling with branding and marketing strategies striving to ensuring quality as well as managing the finances of his enterprise.
a bpo employee with head phone
Finding it too much to handle, he decided to outsource the book-keeping process for a couple of months, after which he was quoted as saying, “Outsourcing the book-keeping process has definitely given me a lot more time which I can now devote to processes which form the core pursuit of The Writing Lab. And we have already started achieving results of this new found time in the form of increased visibility and more customers”

Of course, there is the age-old trumpet of cost savings too with outsourcing, but it's often not as direct as most SMEs perceive it to be. Let's say that an XYZ business decides to outsource its call centre, since it realizes that a call centre is not much of a value addition to its services.

Now, the initial cost of outsourcing may be more than it would have been had the business hired some in-house resources. But the long-term cost savings are often overlooked by SMEs. They fail to take into account the cost of hiring manpower every now and then, training the newly hired manpower and hiring managers to manage that manpower. All that translates to costs, and they are often more than the cost of outsourcing.

As Jitendra Sardesai , CEO I-Source Infosystems Pvt. Ltd. Says ,“The deferred cost benefit of outsourcing is what needs to be taken into account. The cost of infrastructure for keeping a service in-house, the managerial issues, the manpower issues and the training costs can all be done away with by outsourcing services which are not an integral part of the company's plans”

In fact, the issue of manpower for SMEs can be easily solved with outsourcing. SMEs often find it hard to scout talent and retain it, because they lack the brand value of MNCs and large organizations. By outsourcing non-core services, they have one less process to hire manpower for, and that means one less headache.

There is another interesting aspect of outsourcing which came to light while I was having a conversation with the Vice-President of another SME . He said, “We decided to outsource our marketing activities to a third party not because we were finding it difficult to hire the right manpower. The cost was also not an issue here. The issue was somewhat managerial in nature. Being an IT firm, we have strict processes and follow a very conventional business environment. When we hired a marketing graduate, he found it difficult to adjust to the environment, since he was not used to orthodox business processes. At the same time, his casual approach to work was disturbing the whole environment in the office. This mismatch of ideologies is what prompted us to outsource that part of business, since we figured out that most marketing guys would be of the same nature”

The cost benefits, the time benefits, the managerial benefits - everything translates to more competitiveness. It's time SMEs realized the importance of staying lean, because if they don't, they can soon find themselves out of business. As Darwin said, “It's survival of the fittest”.
Pooja Kumar is CEO and Founder for SME Networks Pvt. Ltd. She can be reached at pooja@smejoinup.co
Comment
Name :

Email Address :

Comment :
Enter the code :*
1 Comments >>
Katty
23 Oct 2011 (17:11:20)
It's about time somneoe wrote about this.