Is Outsourcing a Viable Option for 2024?
Outsourcing, both nearshore and offshore, has drawn a lot of attention as CFOs focus on managing profitability in a tighter economy.?Many ask, Can we be efficient and effective in carrying this process out ourselves, or can we save money by outsourcing operational accounting to someone who can provide a quality product at a lower cost?
Outsourcing is typically delivered as a managed service. It’s outsourcing an entire business function, or some portion thereof, so the company uses fewer internal resources to accomplish the same outcome at a better price point. Many struggle with the question, Are we using our current resources at their highest value?
This type of outsourcing can be a simple way to manage profitability if you know how to take advantage of it.
Managed Services Outsourcing
The managed services model of outsourcing involves important work that must be done but that can be completed independently — outside of your organization — and delivered back to you after several levels of review. Neither the work nor the skills needed to complete it require internal management or intimate knowledge of your business’s internal workings.
For example, every business needs accounts payable, but you don’t have to be the one who hires, trains, develops, and manages everyone on that team. Additionally, departments like this typically experience high turnover, and outsourcing eliminates this costly expense.
Views on Outsourcing: Then and Now
In the past, many business owners eschewed outsourcing, preferring greater proximity, visibility, and control. Managed services existed, but many CFOs wanted to see their employees in person every day.
Then COVID changed our world. Since the pandemic, businesses are much more open to remote work and even remote teams. Leaders have gotten comfortable with the idea that quality work can get done outside the office, and even outside the company altogether.
Alongside this shift in perspective, the clear financial benefits of outsourcing entire departments now have greater appeal.
Common Concerns About Outsourcing
One of the biggest misconceptions about outsourcing is that managing different time zones is difficult and inefficient. Entire departments can’t sleep during business hours.
However, most outsourcing firms work in your time zone, not theirs. At the very least, they ensure a reasonable overlap in working hours.
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Another concern is the upfront time investment. Many business leaders are concerned about getting managed services up and running quickly and handling turnover.
This also gets taken care of on the firm’s side. They take care of setup, onboarding, training, and turnover in a way that’s invisible to you. In fact, outsourcing can create more stability for business owners because of different attitudes toward work in other parts of the country and world.
Which Departments to Outsource
Outsourcing isn’t appropriate for all functions. For instance, it would be inefficient to outsource high-touch business processes that require a lot of collaboration with other departments or individuals within the company.
Outsourcing is better suited for standalone functions with independent processes, teams, and management that have high-volume deliverables, timelines, and systems that need little to no oversight.
The most commonly outsourced departments include:
Decide if Outsourcing Is Right for You
Outsourcing is a modern way to simplify business processes and get more done for less. It can ease the workload of managing many departments and employees and help leaders focus on advancing the goals of their business.
To decide if outsourcing is the best choice for your company moving forward, conduct a simple audit. Find out what processes or departments you could easily outsource and whether doing so could save your business time and resources.
If you’re looking for the right managed service provider, we can connect you to the help you need. Contact us today.
thanks for the collaboration, Reagan Mullins!