The Five Best Services to Outsource for SMEs

Outsourcing can give businesses a chance to grow faster, and provide owners with confidence that they can scale up operations as new orders and customers come in. This is especially true if you target the right kind of services to outsource.

We have already looked at how business owners can fast-track their business growth – and save themselves a lot of hassle – by outsourcing some of their business functions. Outsourcing can often be cost effective in its own right, and we have also seen how the initial costs can be funded through cash flow finance: supply chain finance and invoice finance could both help bridge the gap between engaging a contractor and reaping the benefits of your new capabilities.

For those who are convinced, the next question is usually “what services should I be outsourcing?”

How to Choose What Your Business Outsources

To an extent, the choice of what you outsource is personal: what do you think your business does best? Which aspects of the business do you regard as the core value proposition to clients, and which do you view as a necessity to support those core operations?

It is good to concentrate on your core selling point as that is what you do best, but you might want to think carefully about where the value really lies: as an Australian manufacturer, for example, are you really just about ‘making things’, or is your real strength in design, final assembly and product delivery or only one or two of these processes? 

To an extent, what you outsource can even come down to what you, as a business owner enjoy managing in-house. If there are areas where you lack expertise, that is a good reason to outsource – especially if hiring a suitably experienced manager to cover those duties would be difficult or expensive.

In general, however, a lot of outsourcing to SMEs happens in certain core areas that offer advantages of scale and are generic enough that many business owners are happy to let somebody else worry about the logistics and management.

Here are 5 Good Business Functions to Consider Outsourcing:

1. Human Resources. There are essentially two ways that HR functions are outsourced: recruitment only, perhaps also with the payroll function; and by actually using an agency to provide all or some of your staff. The former is useful to almost any growing small business; the latter is ideal for those that have seasonal fluctuations or occasional large orders to deliver.

2. IT Support. Let’s face it, these days you’re either an IT person, or you’re not. For those business owners who don’t relish the thought of tinkering with a computer system while their operations idle, decent IT support is a must. You’ll want a good partner here, as IT is business critical for all businesses. Make sure your contractor will provide suitable back-up and will have an engineer available quickly if there is a problem.

3. Marketing. Unless you have a dedicated in-house marketing team, your marketing needs and budget are unlikely to be constant. Some months you will be having a drive for new customers, others you may want to concentrate on your current business. A good marketing agency will be able to efficiently spread its resources to match your needs, even if you are paying a fixed fee, and you will be able to buy access to far more depth of expertise and knowledge than if you just employ a couple of people yourself.

4. Bookkeeping and Accounting. This is often the first service that a small business outsources, and there are good reasons for that. One is that bookkeeping is a routine administrative task that needs doing well but can be time-consuming; another is that having a good set of independently compiled accounts is invaluable when it comes to business planning and management.

5. Manufacturing. Yes, really. Even if you think of yourself as a manufacturer, it does not always make sense to make evening yourself, from scratch. It may be possible to get some products – or elements of products – manufactured abroad. If you add the high value elements such as design and finishing, you could make real savings. If you’re sourcing goods from overseas, trade finance can help with both funding and logistics.

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