Outsourcing Guide: 13 Functions Your Small Business Can Outsource

If you have ever considered doing business, you must know the tasks involved. You need to start planning and initiating an idea and move ahead with gathering resources. It is just the start of the business. You need staff, team, finance, raw material, machinery, and ancillary services to keep your business moving.

What happens when you have to take care of these things while running a small business? It’s a challenge to keep up with everything while continuing to focus on business growth and sustainability at the same time. It’s time when you need to look at outsourcing the business functions to the respective experts.

Of course, it would be a great choice, but the bigger question is how to select the tasks you should outsource.

But before that, let us understand what exactly outsourcing is all about. So, let us find answers to all such questions in the article to help you know the right way to make decisions and avoid the mistakes small businesses usually make.

What Is Outsourcing?

When a business subcontracts a task or function to a third party, it’s called outsourcing. Both recurring and one-time services can be outsourced. According to Deloitte, global outsourcing spending will be nearly $731 billion in 2023.

Without requiring you to expand your full-time staff significantly, outsourcing enables small businesses to accomplish more with the help of experts. Outsourcing is known as employing a different person or company to carry out duties, offer services, or manage operations that corporate workers previously handled.

A business makes this decision strategically to cut costs and improve efficiency. This concept applies to numerous business domains. Companies frequently contract out information technology services, such as programming, application development, and technical support. They can also outsource human resources, finance, and manufacturing tasks. Companies can outsource entire departments, including their whole IT department.

5 Ws Of Outsourcing

Outsourcing is more challenging than it sounds; there are various aspects of outsourcing you should look into to ensure the decision is right and there are no loopholes or mistakes in between. Also, one should know about the team or the company to which the job is outsourced.

Think of it like this: if you outsource accounting service to a team not equipped to handle your international transactions, you might end up with inefficient accounting, which could be a severe issue. So, answering these questions is important if you want the most effective outsourced team for your small business.

To ensure you make the right outsourcing decision, here are the 5Ws of outsourcing you should know and consider:

1. What Should I Outsource?

You first need to know what tasks you are required to outsource. It will be based on analyzing the internal resources available to your company. You can start by listing down the activities you need to outsource. Now, you can add the resources against each that are necessary and that you have. Once done, you can list down the cost of outsourcing that can ultimately help you reach a decision based on your budget. According to ISG, 92% of G2000 companies are into IT outsourcing.

2. Why Should I Outsource?

Now, once you have the entire list of tasks or jobs to be outsourced, here are multiple reasons you should plan to outsource. Some points are listed here:

• Take advantage of expert and knowledgeable services
• Better services at a lower cost
• Spend less time, energy, money, and resources.
• You can finish large volumes on schedule
• Increased productivity and efficiency
• Lower costs for labor and capital
• Rapid time to market
• Process improvements lead to higher levels of customer satisfaction.
• Gain from improved management and performance

3. Who Should I Outsource?

The idea is to understand what kind of team or individual you need to outsource. If you need help deciding whether to start outsourcing, evaluate your company’s needs to see whether it is necessary. You should then compare the charges, service providers, years of experience, and other aspects to find the most appropriate one.

4. When Should I Outsource?

Knowing the right time to outsource is essential. It’s not that you can outsource from the very first day you start your small business. You should first generate an income and a customer base and have a place in the market before you move ahead with outsourcing. A few good reasons to outsource are:

• If you wish to have access to professional services.
• If you want your services delivered on time, more quickly, efficiently, and affordably.
• If you don’t want to invest in software, technology, labor, or resources.
• If you are looking for some competitive advantage.

5. Where Should I Outsource?

It is the end question in the series you should ask. It’s the final decision. Once you have sorted your options, you need to know where to outsource. It can be onshore as well as offshore. The best thing about today’s business world is that you can do most of the work remotely, so even if you outsource offshore, you have a good chance of getting expert service without any issues. It’s totally up to you where you outsource, but in the end, you should always check the budget and timeframe.

Once you have answered the 5Ws of outsourcing, it’s time to find out what the jobs you can outsource are.

13 Functions a Small Business Can Outsource

The idea of outsourcing is based on the resources available and tasks that need expert solutions. While you can outsource hundreds of functions in a business, it is essential to understand that outsourcing every task might not be desirable. There are pros and cons of outsourcing, too, so one should compare and know that a few outsourced tasks will give a positive outcome while the rest will add to the unnecessary expenses. As per YouGov, 70% of British B2B companies outsource key business operations.

Focusing on the same, we have listed the top 13 functions any small business can outsource, irrespective of the business profile or location. So, here are the functions you can easily outsource:

1. Accounting and Bookkeeping

Accounting is one of the business functions you can easily outsource. Various financial firms can handle your books, manage bills, track investments, and do other accounting-linked jobs when they access your financial details. Additionally, learning all the procedures and compliance requirements your firm must follow might take a lot of time and expertise if you are not an expert in finances.

Also, any errors or miscalculations in the books can lead to improper payments and tax foiling, which are serious legal concerns. But when you outsource this task to a firm or a professional, you will get the best outcome, and it will manage all your accounting most seamlessly and efficiently.

2. Marketing

Making your product and brand stand out among competitors requires a proper marketing strategy and personnel. Marketing requires patience, creativity, and knowledge of the trends to properly place your product or service in the market without any pitfalls. Hence this is one of the business functions that, when outsourced, can offer many benefits to the business owner. Hiring a marketing agency can be helpful.

The professionals at the agency can manage your campaigns, handle your social media, and even ensure the positive publishing of your product is conducted on multiple platforms to increase your sale. You can reach the sales you want with creative ideas and strategies and make your business a top performer. 

3. Information Technology Management

The world has changed a lot, and the increased dependency on technology has shifted various tasks from manual to automated. The biggest problem with accessing the latest technology for the business is that you may not have the required budget, resources, or even both to use the latest technology without any hassle. This year’s global market for outsourced IT services reached $85.6 billion.

The range of IT outsourcing services available to small business owners includes everything from setting up and managing company email accounts to keeping and protecting data in the cloud. Be careful to thoroughly investigate the references and web reputation of any IT company you choose, just like you do with any other businesses you contemplate outsourcing with. Your digital footprint is too significant to disclose to just anybody.

4. Customer Service

The success of a business is highly dependent upon how well it assists its customers. Customer support is indeed one of the primary concerns for every business. Starting from the outbound calls after the sales to helping the customers in case there is any issue with the product or service, there are multiple things a customer support team needs to do.

You can hire an online chat or a call center service to handle your customer support duties if your company deals with many customer interactions but lacks the employees to handle the volume. You will first need to supply resources, methods, and workflows for the vendor or third party dealing with your clients and train them. Your partners will be able to service your clients as quickly as you can once those resources are available.

5. Administrative Tasks

It might sound a bit hard, but the truth is, outsourcing administrative tasks can be beneficial. Administrative tasks involve various jobs, from managing the books and raw materials to ensuring the sales record are in place. Making appointments, managing office logistics, taking phone calls, and planning travel are a few additional duties that help keep a business organized.

The idea is to hire a virtual assistant to take care of all these small tasks and ensure the business runs smoothly. Most virtual assistants charge hourly or have a complete package that includes the duties they will handle on your behalf. You can hire one based on your needs and ensure your business functions run the most smoothly.

6. Warehousing and Logistics

Indeed, these are the activities that go hand-in-hand and are mostly outsourced. Think of the e-commerce giants like Amazon or Flipkart. Both of them are aggregators who collaborate with multiple vendors. Once you place an order, the vendors get notified, and the products are then collected by the e-commerce representatives, packed, and shipped to the respective location.

In the entire process, the vendor does not require to maintain a warehouse or have the logistics channel, but the platform handles the entire task. For a small business, outsourcing warehousing and logistics can be helpful. They can easily track the ups and downs in the stock and ensure packaging and delivery are undertaken in time to ensure no lapses. Also, this will reduce the possibility of having dead stock, which is a big issue for small businesses.

7. Manufacturing Process

Manufacturing requires a lot of machinery and setup, which involves high costs. But at the same time, outsourcing the process will be a great idea if your budget does not support your manufacturing cost. Today, there are factories available that are available on rent or even manufacturing units that will provide you with the goods based on your customization needs.

Once you have sorted down what kind of manufacturing process you need, outsourcing will become easy. India is known to be the manufacturing hub for various products. So if you are looking to outsource the manufacturing unit, it will surely be economical and effective

8. Human Resource and Recruitment

Even as a small business, you must recruit and train people on a regulated basis. Having a full-fledged human resource department in the industry is not a great idea when you can outsource the service to HR management companies. These companies will oversee recruitment, training, policy formulation, and remuneration.

The main area where your inclusion would be highly needed will be at the leisurely time of promotions. Additionally, remember HR aims to foster greater compassion in the workplace rather than just reducing risk. You can obtain an excellent return on investment by identifying and providing perks that entice top talent to join your business and stay there

9. Research

You must have a strong research team if your small but robust wants to be the best in the competitive environment. The research team should comprise experts in the domain, people who can analyze a trend, and people who can help you make better decisions concerning what you should innovate next. Research is a complex task and involves dedication and detailing.

Therefore, you can outsource this process to a research agency if you don’t want to spend your time on something other than your target group or market or if you wish to avoid spending hours on web research. More resources should be available to them so they can contribute particularly priceless insights. You can work with professionals skilled at rapidly gathering data and bringing in insightful information to assist scale your organization by employing an outside research and development team.

10. Digital Platform and Content Management

In the current scenario, digital platforms and content management are crucial for any business’s success. You need to reach your customers in the best possible manner, and digital platforms are a perfect way to do that. But managing all of them, like Instagram, Linkedin, and others, at the same time while posting lucrative content takes work.

Also, you need to have a logo, consistent brand value, and others to ensure your followers get the message you wish to deliver. Eighth, content can increase your website’s traffic, directly impacting the client base. You can outsource for creating video content, infographics, newsletter, email marketing, and other content which will benefit you in the long run.

11. Sales Calls

Making sales calls is one of the things small business owners fear the most. It makes sense because even those who make sales calls may find them intrusive and insulting. Additionally, they can be challenging to master. Contracting out your outbound sales strategy to BPO companies with trained salespeople will allow you to outsource your outbound sales approach.

Lead generation businesses will compile contact lists, identify target customer qualities, and set up appointments with possible clients on your behalf.

12. Data Entry

A data entry clerk is in charge of gathering, managing, and updating data for organizations, frequently entering or updating this data in spreadsheets or databases. They can manually type information from physical documents into computer systems or scan them. Businesses often outsource these roles to maintain accurate and organized databases for customer accounts or other purposes at a low cost because they don’t necessitate specialized skills or training.

13. Legal Services

It is one of the segments usually left out by small businesses, but in reality, having exemplary legal service at your disposal ensures you are secure. Large firms may have in-house legal counsel, but smaller organizations may outsource this position to a third party to provide as-needed, part-time, or on-demand legal services.

These experts may assist with contract drafting and negotiation, risk identification and management, and ensuring the company complies with all applicable laws and regulations. Usually, an agreement on fees, frequently an hourly rate, is made between the company and its outside legal counsel.

Though these are the business functions you can outsource, there are other aspects you should always consider when outsourcing. Also, you may be required to outsource only a part of the business function and not the entire job. For this, we have a set of tips for you listed down here.

Small Businesses Can Meet a Variety of Needs by Outsourcing Resources

As per Clutch, around one-quarter of small businesses outsource to increase efficiency. Small companies can meet a variety of needs by outsourcing resources. They also come in a range of price points, as expected. Outsourcing is the need of multiple small businesses, and the owners need to analyze and understand the tasks they can outsource and the right way to do the same. Even though you are outsourcing business functions, ensure you manage continued follow-up and communications with the outsourcing team to ensure you can handle the deviations on time.

Analyze the importance of the task and the cost associated with outsourcing before you finalize the decision. Ensure you are outsourcing the job, which is crucial, and if you lack the resources. Also, seeking expert advice is never harmful. Now you are ready to outsource and take your business to the next level. Start with listing down the jobs you wish to outsource and look for the best options you can go for. This way, you will end up outsourcing for the most efficient and effective result, which is all you need.