5 Essential Tips for SME Outsourcing

Small and medium sized businesses (SMB or SME) are the most likely organisations to benefit from outsourcing. They will be able to access the talent, tools, and technologies that were once the domain of large corporations.

However, SMEs still need  to invest their time and resources to find the right vendor and build a successful outsourcing relationship. Here are helpful tips that can help SMEs when outsourcing.

Define the core business

SMEs have little time and budget for anything else outside of their main operations. The best strategy is to hold on to the core business and outsource non-core functions. A good example of these are back office functions and IT related services. Desktop and cloud technology has made it easier for SMEs to outsurce these roles.

Establish a sourcing strategy

While much has been said about the pitfalls and disadvantages of outsourcing, all of it can be avoided with proper evaluation and planning. SMEs must establish a sourcing model that fits their business, in both financial and operational terms.

SMEs should look into:

  • Scope and scale – determine the type of work that needs to be outsourced and the volume of work required. They can choose to outsource a project or utilise offshore staffing
  • Time – outsource stand alone projects to test performance before signing any long term contract.
  • Process improvement – work with the service provider and find ways to maximise efficiency, such as service integration.
  • Delivery model – find out if there are legal or regulatory concerns that prevent the business from outsourcing outright.
  • Feasible Results – the client and service provider should define what success means to both of them. This helps establish a performance goal that is both valuable and attainable.

Implement a rigorous selection process

Once all preparations are done and business goals are established, it's time to scout for potential service providers. SMEs shoud choose a service provider that has:

  • Affinity with their culture
  • Knowledge of their local market conditions
  • Little difference with timezone
  • Has experience in working with SMEs
  • qualified and highly skilled workforce in a low cost labour market

Leave room for innovation

Outsourcing's main forte has always been cost savings. While this maybe convenient, it leaves no room for innovative practices. SMEs should leverage their service providers' knowledge in new technologies and business processes. Outsourcing and offshoring can be used to increase productivity and efficiency.

Good Governance

Service providers have their own niche. However, this doesn't mean SMEs can leave everything to the expert. They still need to monitor the deal throughout its duration, whether its outsourcing or offshoring. More importantly, continuous changes in technology and the economy impacts a business one way or another. This makes good governance highly important for SMEs in fixed long term contracts.

Any business move, when undertaken with proper evaluation and planning is most likely to succeed. Outsourcing is not just a tool to reduce costs. When done right, SMEs can use offshoring and outsourcing to grow and expand their business.

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