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Is outsourcing for big firms only? How can a small business benefit from outsourcing?

Posted On April 27, 2014 BY Madhu Jain

Outsourcing could be understood as ‘contracting out certain business functions or operations to external entities or third party service providers’. It usually involves internal business functions like human resources, accounting and financing, customer or client servicing etc i.e. non-core activities or auxiliary activities which are important for the successful functioning of any business.

benefits-of-outsourcing-for-small-businesses

Benefits of Outsourcing for Small Businesses

There are many advantages to business outsourcing. Any firm that considers outsourcing is benefited on many facets of business operations; the prime being achieving certain level of flexibility in management, efficacy in performance focusing on core competencies, pace of business processing, effective supply chain management, cost reduction saving huge capital expenditures on people and infrastructure.

It is a common perception that only large firms with large business processes and capital involvement should consider outsourcing as it is a cost intensive activity. This perception needs to be demystified. Even small businesses or small / medium scale entrepreneurial initiatives can very well consider outsourcing for the following benefits –
– Effective resource allocation and resource conservation – Prime necessity of any small business initiative is to implement their business strategies effectively and in the most appropriate as well as structured manner. This ensures least or no wastage of resources while striving to achieve goals and building brand value for the company.

In such a situation, outsourcing could be looked up as an effective strategy. The enterprise can focus on its core competency with manageable human and economic resources. Non-core but essential activities could be outsourced to third party service providers. It will help in not only reducing extra investment on human resources and developing requisite infrastructure but also in fast and effective processing of business activities.

– Benefits from the expertise of third party service providers – agencies who are masters in certain business processes definitely would have more to offer based on their expertise, knowledge and experience. Small / medium businesses can reap benefits from such a package of expertise and experience. At times, it helps in bridging up some overlooked aspects of some activities which may benefit the business.

– Outsourcing expert as a virtual department – the outsourcing firm will function as a virtual department managing all the minute details of the outsourced activity. This saves enough time and resources of a small enterprise allowing the masters to manage them.

– Effective time management – when certain non-core activities are cared for by specialized agencies a lot of time could be saved. At the same time, progress of such activities would be tracked professionally by specialists favoring the growth of businesses.

Outsourcing is not a cost intensive but a cost saving option. It is an option which brings effective and professional management of non-core business activities at the doorstep for the betterment of businesses. It is equally viable for small business as large businesses. Considering all the benefits mentioned above, every business, whether small or large, should opt to benefit from such specialized services.