Outsourcing can save a lot of time and money, but hiring outside experts for the wrong tasks can also negatively impact your business. Here’s how eight business leaders and advisors in The Oracles decide what to outsource and what to keep in-house.
Consider how your needs will evolve
By outsourcing, entrepreneurs can operate in ways that used to be reserved for much larger companies. When we first opened Drybar, we outsourced all our accounting, bookkeeping and payroll, which saved us time and money. As a result, we appeared (and were) more buttoned-up than we could’ve been on our own. When we became large enough, we took that work back in-house.
We used to outsource our towel services, too. While we now handle that in-house, it was much more cost-effective and practical to outsource in the beginning. The point is, what makes sense for you now may change as you grow and evolve.
Keep your team small and efficient
Focus on what you do best and outsource the rest. Unless you are a big company, you don’t need a full-time accountant. Use sites like Upwork to find web developers, HelpGrid for customer support and MaxWeb to drive traffic to your website. By using outside experts, you save time, pay only for results and reduce the noise. Besides, it’s easier to replace a service provider than to train and manage people.
If I’m not sure whether to outsource a task, I ask myself three questions: Is this what we want to be known for? Can we do this better, faster or cheaper than an outside expert? Will outsourcing negatively impact our customer experience? If the answer is no to all three, we outsource so we can focus on what we do best.
Don’t outsource your core skill set
Never outsource whatever defines your company’s core skill set. That might be sales and marketing, manufacturing, finance, or tech support.
It’s tempting to see outsourcing as a way to streamline operations and reduce costs, but you cannot put a price on your core business. Keep it in-house, fine-tune it, master it and be the best at it. That will pay you back in more ways than any cost savings.
— Scott Shainman, president of Getac North America, who helped lead the company to become one of the world’s largest rugged laptop and tablet manufacturers; connect with Scott on LinkedIn and Instagram
Mitigate your risks
Look at the risk associated with the task. Outsourcing things like compliance, cybersecurity, accounting and complex systems can mitigate your risk. While extremely important, these areas can detract from your ability to grow and optimize your core services. If you don’t view yourself as an expert in something, find a service provider that can give you confidence your critical systems are compliant and robust.
We manage our analyst work, document tracking software, CRM, data mining, design and development because they are our core services. We outsource tasks like opening investors’ retirement accounts because we aren’t familiar with the regulations and operational procedures.
— Thomas Carter, founder and CEO of DealBox; read about Thomas: “This FinTech Veteran Is Making Cryptocurrency Startup Funding Legitimate”; connect with Thomas on LinkedIn and Instagram
Don’t outsource relationships
Jeff Bezos is famous for asking what will be the same 10 years from now rather than asking what technology will change. It’s a great reframe, and I believe that being able to develop real, genuine relationships is more valuable than ever because of technology and outsourcing.
Besides payroll, printing and some tasks that can be done virtually, we don’t outsource much. Each team member works only in their specialty. We will never outsource marketing, messaging and sales because that’s where we create value. We are paid for our creativity and ability to develop relationships.
Keep it in-house if it saves money
My rule is simple: Keep it in-house if it is a core competency or you can save money doing it yourself. Otherwise, outsource it.
We outsource payroll, accounting, taxes, printing and legal tasks. We keep marketing and training in-house because they are the two biggest areas where we have a sustainable competitive advantage. Most real estate companies outsource photography and sign installation, but because of our volume we can save money and provide better service by doing it ourselves.
Don’t reinvent the wheel
Initially, we tried to build what we needed ourselves — including our own CMS, mailing service and app analytics. But as MacPaw grew, those tasks became a burden. I learned it’s important and economically feasible to outsource jobs that don’t represent the core of your business.
Identify what makes you outstanding and why your customers choose to buy from you. This is where your main focus and resources should be. Plenty of companies specialize in solving your other problems.
Outsource if someone else does it better
Effective scaling means leaning into what you are good at and enjoy — and what moves the needle forward. It also means handing off anything someone else can do faster and better. You can build a strong outsourced team with lower overheads than if you hired everyone yourself. You just need a savvy approach and effective systems, metrics, and reporting around hiring and managing talent.
Because we began as a location-independent team, outsourcing wasn’t optional. While I mastered many skills in the beginning, our growth required that we outsource almost everything quickly. We’ve adopted project management software and outsourced sales, design, web builds, ad campaigns and community management. We keep vision, strategy and creative writing in-house.
Originally published on Forbes.com. ©2019 by Forbes Media, LLC. All rights reserved.
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