Does outsourcing have a bad reputation?

Handing over the reins to an outsource partner may seem like a daunting move as a business, but it can free up time, internal resources and capital all to your benefit. But if you are daunted, you’re not alone. A lot of business owners and managers fear the idea of outsourcing – whether we’re talking financial affairs, parts and products or even human resources. A large part of this has to do with the bad reputation outsourcing has, and we’d like to set the record straight…

Outsourcing is often seen as a sure way of losing control of key aspects of your business and putting the quality of your product or service in the hands of someone with no ‘invested stake’. And although this may be true in some instances, it’s entirely dependent on the outsource partner you choose. A few bad apples shouldn’t ruin the entire bushel. Let’s use communication as just one example to demonstrate how a good outsource partner would handle this key function (regardless of what they’re contracted to do).

A good outsource partner should have constant communication with you as their client, formally and informally. There will be a formal comms process and escalation procedure that dictates how often project updates are communicated, to whom, and what happens when an urgent matter needs to be discussed. If anything happens on the fly, your outsource partner should reach out to you and fill you in on essential info.

This is what ‘good’ looks like in just one area, and there are many areas in which your outsource partner needs to excel including quality assurance, cost containment and confidentiality. These are often areas where an outsource partner can fall short. But as we said, it’s about choosing the right partner, vetting their service quality and ensuring there are synergies both in terms of business philosophy and way of work.

We spoke to the head of people and culture at a leading virtual gaming company, and she believes outsourcing can be an extremely effective way to manage traditional systems that can be labour intensive and are often deprioritised. “The key is ensuring that the structure of how it [the outsourcing] works, aligns as closely as possible to existing reporting standards,” she concludes. This means that if you monitor and report on success in a certain way or need feedback in a certain way, that you fully integrate your outsource partner into this ‘way of work’ and make them aware of your standards. Outsourcing is a two-way street when it comes to building an effective partnership and support should come from both sides.

If you’re a business that already adheres to ISO standards, then looking at ISO 37500:2014 (which provides guidance on outsourcing) is another avenue you could look at to ensure a smooth outsourcing relationship. This standard includes: unpacking good outsourcing governance for the mutual benefit of both client and provider, determining how collaborative relationships can be enabled, and identifying any upfront risks among other areas. You can explore this ISO in a bit more detail here.

Something else to bear in mind is that outsourcing isn’t for every business (another potential contributor to its bad reputation). Sometimes it simply doesn’t fit in with your business model or the vision you have for what you want your business to be. So, when is outsourcing a good idea?

1. When you’re starting out and don’t have the big budget or personnel to handle key business areas like accounting or marketing.
2. When there’s a clear lack of ‘deep’ knowledge in your business in a particular area and you need an outsource partner’s expertise to lend support and fill in some of the critical skills gaps.
3. When you’re looking to expand your business globally or into more niche markets.
4. When you need to be highly flexible and pivot within your business, meaning your product or service requirements often change.

Outsourcing has been described as a “fundamental international dimension of global business reality” in a Harvard Business Review article, and that was in 2012. That reality has only expanded, with the rise of technological innovation, remote workforces, and digital nomads.

If you’re hesitant to outsource, remember that a lot of ‘outsource negativity’ comes from partnering incorrectly and not having the correct processes in place to handle an outsource partner effectively. With iLodge, you won’t have that problem. We’re your true partner and have the years of experience and client cost-savings to put your mind at ease.