Cost reduction is one of the responsibilities of the head of the enterprise, its accountant or financial department. The payroll fund and taxes on it are a heavy burden for small companies. It is not practical to create a full-fledged workplace for some specialties. The way out of this situation is outsourcing. What kind of relationship between enterprises is this, their pros and cons are discussed by ecommerce development services specialists.
What is Outsourcing
Outsourcing is the transfer of a part of a company’s business processes or tasks to external contractors, i.e. to another enterprise or freelance specialists who are not on staff. For example: accounting outsourcing (record keeping, reporting), HR outsourcing (recruitment, personnel documentation), cleaning services.
The peculiarity of such relations: the customer does not know the specific contractor, he contacts the management of the company offering outsourcing services. The client does not care about the issues of payment for the work of a specific contractor and his taxes.
Pros |
Cons |
| ● reduced costs for training, hiring, payroll taxes, equipment for specialists;● access to experts with narrow knowledge, who are difficult to find on the labor market;● focus on key tasks – operational routine is given to an outsourcing company;● flexibility – it is easy to increase/decrease the volume of required services;● speed of implementation – the external contractor already has the necessary material and technical base;● some risks can be transferred to the contractor. | ● less control over processes and quality of work compared to an in-house employee – you are just a customer of services, not a big boss;● dependence on external contractors – if they let you down, there may be problems with the business;● communication problems – especially if there is a time difference;● risk of confidential information falling into third hands;● not always cheaper – the more responsibilities, the higher the cost of services. ● problems with the quality of work performed – the customer does not know how busy the contractor is. |
When The Delegation Is Justified
If you decide to delegate part of the company’s operational activities, then you should carefully consider whether you are ready to tolerate the risks that arise when using outsourcing for the sake of short-term savings.
Delegation is justified in the following cases:
1. There are no necessary specialists within the company – for example, to make a website or extend a network for connecting a PC.
2. It is necessary to reduce costs – it is cheaper to transfer the task to a contractor than to hire, train and maintain full-time employees.
3. The company is quickly scaling – in this case, it is recommended to transfer some of the responsibilities to an external contractor.
4. Temporary or non-standard tasks – creating advertising products, automating accounting (debugging a warehouse system, logistics).
5. You don’t want to be distracted by operational routine – this often concerns accounting, preparing and submitting financial reports, paying taxes, recruiting personnel.
6. You need high speed to solve certain issues – the contractor company, as a rule, has experience and proven methods.