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How to know it's time to stop hiring and start outsourcing

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As your business grows, so do demands on your time and specialist skills needed. To succeed, organisations need to lead the business in the most efficient way, meaning lowering their operational costs while maintaining a high quality of service.

If your business is expanding, it's vital to get your priorities straight. Chances are you need to hire more employees, but can you afford additional headcount on your payroll? Factors you need to consider include recruitment costs, benefits like sick leave, taxes, office space, etc.

You don't need to hire new full-time employees to support your growth. Outsourcing projects or certain functions on a contract basis can often be more efficient. Delegating some of the business functions outside of your company can help keep operational expenses low, and give you access to skills you are currently lacking.

How to tell if it's time to start outsourcing?

1) Your employees can't perform certain, specialised tasks

Sooner or later, you will have a task that can't be fulfilled internally, and a specialist will be required. The skill needed might be so specialised that it's impractical to have a regular employee do it. For example, if you are a tech startup company in need of an accountant; it will make sense for you to outsource handling your books to an experienced accounting firm. When you hire a professional to complete the project, and you are happy with the service received, you can rehire them again if necessary in the future. Among top outsourced jobs, today are information technology, administration, logistics, finance, human resources and call centres.

2) You have irregular tasks recurring in cycles or one-time projects

If you are a small or a medium-sized company, you might need a website design or to run a marketing campaign, but you can't afford to hire the in-house team of marketing professionals. Also, it wouldn't make financial sense as you don't launch websites nor run marketing campaigns every day. If you use a contractor or a consulting company, they'll only charge you for the work performed which makes it more cost-effective.

3) Cost of outsourcing is less than hiring a new employee

Cost reduction is one of the main benefits of outsourcing, although it may seem the opposite at first glance, as most outsourcing companies present lump-sum bills. When comparing employing on a permanent basis and delegating a function to an external company, you need to look beyond the cost of monthly salaries. In addition to wages, most companies have insurance costs, payroll taxes, sick leave and other benefits. You will also have the expense of employee training and tools, including any specialised software and hardware that they will need to do their job. When you add all these costs up, an outsourcing company's fee covers it all and is typically much lower than the cost of hiring someone full time. Outsourcing cuts operational expenses and helps you increase profits.

4) Your employees don't enjoy the job

There are particular tasks, which can needlessly drain your employees. You should look at your staff's strengths and weaknesses, and assess whether the job is core to your business or not, to decide if it's worth outsourcing. For instance, if you have a team of programmers they probably prefer coding to closing sales, as they wouldn't be comfortable doing this. That's when outsourcing this task to lead generation specialists makes sense.

5) Activity ends up wasting time and energy

One of the more popular jobs that are being outsourced recently is bookkeeping. Not only does it requires specialised knowledge, but it's also very time-consuming and needs immaculate attention to detail. Not many business owners have time to manage finances internally, especially if they are looking after multiple projects at once.

6) You have more work than time

Having plenty of work is many organisations' dream. However, when you can't complete the work you've been tasked with, you might need a contractor to help you out.

Similarly, if you pass on promising projects due to a lack of time or resources to work on them, you need to consider outsourcing.

7) Your routine tasks stand on your way to growth

If your company doesn't grow as fast as you expect it, or when progress plateaus for a while, it's a sign that something is wrong. Your marketing team, for example, might be too busy dealing with routine administrative tasks that they don't come up with innovative ideas for promoting your product or service. Outsourcing these tasks will free up your employees to focus on your primary business goals.

8) You are a startup and can't handle employees yet

When you are a startup in a growth stage, you need to hire a great team. Recruiting and team management can be a challenging and tedious task though. Also, while you might feel the need to invest in and develop your business, you might be worried about keeping your expenses under control. Using freelancers might be a better option at this early stage.

9) You can't find the skills you are looking for

Rather than wasting time waiting for someone with the right skill set to show up, outsourcing can be more time and cost-effective.

For example, in Europe, all countries currently experience shortages of ICT professionals due to huge demand for ICT skills among most sectors. If you need a top programmer and can't find the right candidate for few months, you can try to outsource your position, as there might be an available coder in a different location.
Outsourcing has many benefits and can contribute to an organisation's growth in the long term. It helps to increase the flexibility of the business model and to lower operational costs. If you haven't tried it, and you recognise any of the described signs in your own company, go ahead and give it a go.

Is it time for you to start outsourcing?