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Benefits of Outsourcing

-- 2011-03-04 3:00 am --

Small businesses often outsource various important functions—such as IT, payroll, and accounting—because that is the only option they have. However, it is important to realize that outsourcing provides many other benefits in addition to helping the business owner run a smooth operation. They include the following:

  • Outsourcing is a cost-cutting measure because it releases funds that can be used in some other investment in the business by changing fixed expenses into variable expenses. It also helps startups to forego large expenses at a time when they can least afford them. In addition, your company will attract more investors if you outsource because you will use more of your capital for activities that are income-producing.
  • Any small business that does not use outsourcing will have higher advertising, distribution, and research and development expenses, along with others, which causes them to raise prices. With this in mind, you may be ahead of competitors in your industry if you decide to take that step.
  • With outsourcing, there is no need to hire temporary employees for short-term projects and seasonal activities, and your staff will be free to devote all of their time to conducting regular business.
  • A reliable outsourcing company will have the resources you need to begin a project immediately. Without their help, you might spend a considerable amount of time trying to find the workers you need and giving them the necessary training to do the job. Also, if the project calls for a major investment of capital, that can result in further delays as well.
  • With the benefit of outsourcing, managers can focus on the company’s main mission and satisfying customers without having to worry about being distracted by the peripheral issues that vie for their time and attention
  • Outsourcing levels the playing field for small businesses, because it enables them to provide the support services that large corporations offer to their customers with expertise, efficiency, and impressive economies of scale.
  • Competition, market conditions, the state of the economy, technology and government regulations often change rapidly and create a certain element of risk for any business. A good outsource provider will assume the risk you are facing, and as a rule, they are quite adept at knowing how to lessen and avoid it. They should also provide systematic reports as a sign of their effectiveness and accountability.
  • Some functions that are part of your company only have to be done on a part-time basis. For example, if you need someone to spend a few days each month to take care of payroll, that would be the time to think about outsourcing the task, as opposed to paying your employee a full-time salary to do the job.