I first learned the value of outsourcing when I worked at Xilinx, the pioneer of the fabless movement. Instead of building their own fabs (which would be a costly endeavor) like what the other semiconductor companies were doing, Xilinx made a bold decision to outsource the fabrication of their FPGA chips so they could focus on what they did best—designing the best FPGA chips.
Many small businesses will try to cut costs by trying to do everything themselves, which is a big mistake. If you want your business to grow faster, you should outsource as much of the time-consuming as well as the specialty works as possible so you can focus your energy and limited resources on what you do best.
By outsourcing, you leverage the expertise and experience of others to help manage necessary business tasks and operations, allowing you to focus on creating the best possible product or service and the best possible experience for your customers.
Here are the things small businesses should outsource:
1. HR, Payroll Processing, and Benefits Administration
A strong human resources function requires expertise in employee relations, payroll, employee benefits, culture, compensation, performance management, talent development, employee engagement, compliance, on-boarding, off-boarding, HR technology, and more.
But most small businesses hire an HR Generalist, rather than springing for an expert in each of these areas, due to budget. With so much responsibility, strategic initiatives like culture, talent acquisition, and employee engagement are often neglected, because administrative tasks like payroll processing and payroll tax reporting and deposits take precedent. Other initiatives may not reach their full potential if the generalist doesn’t have much experience with them, and your organization may suffer as a result.
Outsourcing HR, Payroll, and Benefits Administration allows small businesses to get fractional ownership of a team of experts. You will benefit from having access to senior HR leadership to build your strategy, and subject matter experts to implement it.
This team can build benefit plans, workers compensation insurance, HR policies and procedures, and more, that are customized and implemented for your organization’s specific needs. Then you can easily take over some or all of the outsourced responsibilities as your internal team grows.
Learn about the two main HR outsourcing models by downloading our free e-book: PEO vs HRO: Which is better for helping to elevate your business.
2. Marketing and Web Design
Similar to the HR function, there are so many facets of marketing: search engine optimization, paid advertising, content marketing, social media marketing, email marketing automation, branding, and more.
Again, outsourcing for some or for all of these areas allows you to leverage the experience and skills of experts to help you get better results faster.
Very small organizations may hire a marketing agency, or team of independent consultants, to work directly with the CEO or another company leader. As your business grow, it’s quite common to hire an internal marketing director to coordinate the balance of internal and external marketing efforts. Even very large organizations often outsource marketing services to supplement their existing teams.
Web design is usually not a full-time job at most small businesses, especially since content management systems like WordPress have made it easier to update website content. Many small businesses will outsource the initial design of their website to build a few custom web pages and templates. Then they’ll contract out smaller projects, such as custom landing pages, as needed.
The website is a key business asset. As such, you should invest in a professionally designed website that looks attractive and professional, and is optimized to attract web visitors and convert them into customers.
3. IT and Security
IT and Security is another function where you likely don’t need a full-time hire—although you certainly need a dedicated resource. Things like software installation, device troubleshooting, and disaster recovery aren’t things you’ll need on a daily basis, but they are things you’ll want an expert to address when they arise. Plus, these skilled IT and Security professionals are notoriously difficult to find.
Outsourcing IT and Security allows you to leave technical issues to on-demand experts when you need it. In addition to help desk services, they may also assist with network monitoring and maintenance, and security.
A word to the wise: get a service level agreement that specifies response times for different types of issues you might experience. For instance, one hour for issues that are blocking employee productivity, and 24 hours for software installation. You don’t want your employees losing productivity because of slow response times.
4. Accounting and Finance
While modern accounting software can simplify and streamline tasks like invoicing and payroll management, it can still be quite beneficial to outsource this function. Having fractional use of finance and accounting professionals can help you make more strategic financial decisions, and provide stronger financial compliance.
For instance, financial planning and analysis can help you make important decisions about headcount planning, expansions, and financing. Month-end close can help you maintain clean books so you’re prepared and compliant at tax time.
Keeping your finances in order is important to keeping your small business running, so don’t try to take on this task yourself unless you’re well-versed in small business accounting.
5. Talent Acquisition
If you don’t hire frequently, hiring a dedicated internal recruiter often doesn’t make sense. Even if you do, a single recruiter won’t have the expertise or time to recruit for every single position. Senior or highly skilled positions often require a deep understanding of the role to source the right candidates, properly evaluate them, and keep them engaged in the recruitment process.
Hiring managers may have a good understanding of the role, but often lack the skills needed to find and engage the best talent on the market.
Outsourcing some, or all, of your talent acquisition function can better ensure that your organization attracts and hires the talent you need to succeed. It’s quite common for small businesses to utilize agency or contract recruiters, as needed, to find and initially vet candidates before they’re interviewed by the company. This ensures that you only spend time evaluating the best candidates for the role.
Another option is to utilize a recruitment process outsourcing (RPO) company to design and manage more of the recruitment process, including evaluation and onboarding. This option allows your organization to utilize talent acquisition experts to hire great candidates, while you focus on running other aspects of your business.
There is so much involved in running a successful small business. Outsourcing crucial functions like HR, Marketing, IT, Finance, and Talent Acquisition can help you focus on your core strengths instead. You know your business better than anyone else, so only you know which functions are best suited for outsourcing, and which are better handled in-house.
Keep in mind that this can change over time, as outsourced services can be flexible to meet your needs now, and in the future. This may mean you outsource all five of these functions early in your company lifecycle, and gradually take them in-house as you see the need. Or, it may mean that you build out these internal functions now, and add supplementary, outsourced help as your business grows. The beauty of outsourcing is its ability to meet your organization’s unique needs.
Just make sure that you do your due diligence when selecting a contractor or vendor. Be sure to take time to thoroughly review work samples and check references.
Lastly, you should treat your contractors or vendors as your valued partners so that they will continue to deliver high-quality works for you. That means paying them on time, allowing them to make a fair living, and treating them with respect!