Written by Allie Delos Santos
You might decide to outsource certain business functions to fill a skill gap or address rapid company growth. Business process outsourcing (BPO) frees up valuable resources and time, which improves the bottom line in the long run.
Despite all the benefits of outsourcing, should you outsource everything? Not all tasks should be delegated to a third party. You must consider which roles to outsource and which to keep in-house.
This article discusses the functions your company should perform by itself and the roles it should outsource.
Roles and Functions Not To Outsource and Why
Before discussing unsuitable roles to outsource, let us first define what BPO is. It means delegating certain business operations and responsibilities to third-party service providers.
Nowadays, almost everyone outsources, driving the global BPO market size to almost $262 billion. And why not? The efficacy of BPO has been evident throughout the years, and it benefits businesses of different industries and sizes.
However, certain roles are better kept in-house, no matter what happens. Here are functions you should not entrust to service providers:
- Core Competencies. If you market certain products or provide specific services, you have expert knowledge about them. You cannot expect a third party to be an expert at what you do or sell. Their primary focus is customer service, back-office operations, or administrative tasks.
- Final Say in Hiring. Never outsource this function. Outsourcing recruitment and human resources has a lot of benefits, but the final hiring decision should be yours. You know best whether the candidate will bring value to the company and fit the role.
- Employee Training and Development. The company management should have the final say in the training and advancement of employees. Assigning a third-party team to guide employees is unsuitable—you should control how you lead staff members to become the professionals you need.
- Termination Management. A role to never outsource is termination management. Similar to the point above, in-house leadership teams should be in charge of retaining and terminating staff. You should be prepared to deliver good and bad news to your employees.
- Company Financing. The finance department should be in charge of deciding how much budget a particular department or project receives. Financial investments and decisions should be kept internally because in-house managers are more familiar with the company’s status.
- Expense Sign-off. Owners and executives must closely monitor each transaction for a business to remain profitable. Otherwise, it could lead to fraud, theft, or serious negligence. Signing off on expenses is time-consuming, but tracking business finances is time well spent.
- Account Management. Another role to never outsource is the management of existing accounts. Clients deserve to get that personal touch. When third parties delve into their commitments and investments in your brand, clients might feel they are not important enough to devote in-house resources to.
- Sales. Finding someone who can tell your story and your in-house team is rare. It is also difficult to find individuals speaking with the same conviction and passion as you about your brand. Outsourcing sales means you are one of the provider’s many clients, so your prospective customers will not receive the same attention.
- Business Relationships. Never outsource roles wherein business relationships matter. Doing so would interfere with sales and customer success. Moreover, the trust built from those relationships is difficult to replace.
- Risk Management. The idea behind risk management is more than just solving a problem. The most important factor in running a company is knowing how success is achieved. An in-house team of problem solvers should be present to solve problems when they arise. The ability to solve problems helps prevent them from happening again.
- Executive or Leadership Roles. The roles to never outsource are those that directly shape the company’s success and those that involve strategic planning and executive functions. Organizational objectives should come from its executives. If anyone knows the principles that keep the company running, it should be its own leader.
What You Should Outsource Instead
Some businesses outsource an area of day-to-day operation to concentrate on core functions or eliminate time-consuming tasks that do not generate profit. Others outsource because they lack the capacity or resources to hire full-time employees to perform the task in-house. But the most common reason companies outsource is to save money.
Here are five commonly outsourced roles and why it makes sense to outsource them:
- Customer Service. This business function is time-consuming. Outsourcing it to a reputable provider relieves you of that stress.
- Data Entry. Indexing, scanning, cataloging, and order processes are data entry roles best outsourced. One should only be wary of outsourcing data entry when the information involved is confidential.
- Accounting. Outsourcing accounting is a good option for small businesses because managing the job without experience is difficult, especially with many compliance and tax regulations.
- Information Technology (IT). It is the most commonly outsourced process. Offshore IT analysts are happy to charge 70% less than the average wage in the U.S. Differences in time zones are also no problem, thanks to graveyard shifts in the BPO industry and the internet.
- Web Development. A functional and well-designed website is pivotal to success. However, not all companies, especially small businesses, need or can afford an in-house web developer. Web development outsourcing is the solution to cost-effectively acquiring this expertise and reducing time-to-market.
Any role you can clearly define and outline with a standard operating procedure (SOP) is suitable to be outsourced. Before outsourcing any function, check the return on investment (ROI) from outsourcing. Then, develop an SOP that carefully describes each step of the role, performance expectations, and ways to achieve the objectives.
Common Mistakes To Avoid When Deciding Which Roles To Outsource
If you are a beginner in outsourcing, you will probably make mistakes detrimental to your business. Avoid them by being proactive and examining these common mistakes:
- Not having a clear plan or roadmap on how to proceed
- Jumping in too quickly without understanding the complexities of the potential partnership
- Outsourcing an entire department right away
- Not taking the time to draft standard procedures
- Outsourcing tasks just because it is convenient for you
- Failing to identify the strengths and weaknesses of your in-house team
- Allowing external providers to tell you what BPO roles and responsibilities you need
- Subcontracting a role just because it is cost-efficient without analyzing other factors
The Bottom Line
Outsourcing is indeed becoming a pivotal part of any successful company. BPO agreements materialized, thanks to phone calls and meetings over coffee. But today, organizations can acquire solutions through the Internet. Outsourcing customers can draft contracts with service providers without meeting face to face.
Remember that some roles make sense to outsource, while others are better kept in-house, such as account management, company financing, and your core competencies.
Are you thinking of outsourcing some business operations? We provide professional services to help you scale cost-effectively. Let’s connect to find out more!
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About The Author
Allie Delos Santos is an experienced content writer who graduated cum laude with a degree in mass communications. She specializes in writing blog posts and feature articles. Her passion is making drab blog articles sparkle.
Allie is an avid reader—with a strong interest in magical realism and contemporary fiction. When she is not working, she enjoys yoga and cooking.