Should you outsource, and if so what? Here’s how to decide
By Randy Rayess
People often ask me if outsourcing is really a viable option. My response to that is always an enthusiastic “Yes!”
There is a certain stigma associated with outsourcing, and many people prefer doing things in-house. But if done correctly, outsourcing can be very powerful. It can enable you to run an efficient and streamlined business. It also spares you the trouble of scaling up divisions to take care of tasks that are not core to the company. This, in turn, can reduce overhead costs and keep your company more flexible. Finally, it frees you up to turn your attention to critical business tasks.
But how do you decide which tasks to outsource? How do you know which processes can safely be handled outside your own company?
To that, my answer has always been straightforward: All tasks that are related to the core area of your business should be kept in-house. Almost everything else can be outsourced.
For example, a computer-vision company should manage everything related to its computer-vision technology in-house. However, that company is free to outsource other processes, like content writing. On the other hand, a content-marketing company would keep everything related to content creation in-house, and freely look for a third-party vendor to handle its technical needs.
As you can see, it’s not the process in itself that matters, but what it means to your company. If it’s critical to your business model, if it differentiates you, do it yourself. That’s the only way you will be able to ensure quality services and offer a unique experience to your customers.
If your company is working on some new technology, avoid outsourcing anything related to the core intellectual property. If you must, find developers to build the basic technology that is not differentiated, but keep all the innovation in-house.
Some non-core operations that companies commonly outsource would include repetitive tasks like data entry, specialized tasks like IT, and expert tasks provided by skilled executives like auditors and financial analysts.
Ask yourself this before you decide to outsource
Is the task we are outsourcing a key differentiating factor in our business?
Can bringing in a great outsourced specialist allow us to do this function faster and better?
Can we find and vet a specialist who is great at the function we are looking to outsource?
Will the task need constant supervision after it’s been delegated to a third-party vendor?
Answering these questions will put you on the right track and help you decide whether outsourcing will be in your best interest or not.
At the end of the day, outsourcing is a matter of trust. If you find a strong partner, that partner will be able to help you work faster and more efficiently. You won’t have to hire a full-time team or train it from scratch on a particular skill. The world is getting a lot more competitive, and a great way for companies to succeed is by focusing their energy on the key areas of their business and delegating the rest to outsourced specialists.
Randy Rayess is the co-founder of VenturePact, a service that helps companies find and engage with vetted software development teams. He is passionate about remote work, outsourcing and software development. He previously worked in private equity at SilverLake Partners, in machine learning and in payments.