The Advantages Of Outsourcing

By | 2017-12-11T22:54:03+00:00 October 3rd, 2012|Categories: HR Articles|Tags: |

Outsourcing services have played a key role in many businesses for over a decade.  From call centres to Human Resource management.  The ability to outsource certain areas of the business has many fundamental advantages which  can often be overlooked.

Why use outsourcing?

Focus on what’s important

It is often the case that administration gets in the way of your core activities, whether this be HR management, IT projects or Sales campaigns.  By outsourcing these administration duties, a business can enable the department to concentrate on core activities which, after all, are the areas that will drive a business towards its goals.

Seasonal demand

Many companies that experience seasonal fluctuations in demand are turning to outsourcing.  Not only to stabilise the additional strain on the company’s resources but also to avoid expensive recruitment, training and salary costs.

Expertise at your fingertips

Outsourcing companies offer the expertise in their field which enables them to complete the tasks assigned to them quickly and efficiently.  Here at CIPHR for instance, we offer HR outsourcing with regards to reporting, system supervision, administration and configuration.  As the system was developed by us we have the expertise to carry out any process on our software in a shorter time frame than our clients may be able to, given their busy schedules and various responsibilities in their day to day jobs and our in depth knowledge of CIPHR’s functionality.  Since the introduction of the service in 2010 our outsourcing team’s diaries have been booked solid with tasks and processes which clients simply either do not have the time to complete themselves or which they have decided are better carried out using our expertise.
Having access to an extra source of expertise also enables companies to explore different avenues without the need to hire and train new employees, the knowledge is ready and waiting instantly.

This is the same (or should be) for other specialised outsourcing companies as explained later in this article.

Cost savings

Cost savings can be achieved in a number of ways through outsourcing;

  1. Salaries – Outsourcing certain functions may negate the need to hire an additional member of staff.  The recruitment costs alone can be very high and, coupled with this the ongoing salary can result in excessive spend on a task that can be completed by an expert outsource company in a couple of hours per week/month.
  2. Training – Training new members of staff can be both costly and time consuming.  It is often the case when a new employee is being trained, a number of employees from around the business will be required to give up their time to provide training on their specific area of the business.  Sending a new employee (or an existing employee who is retraining) on external courses is also costly: the costs for the course itself, as well as the expenses can all be avoided through the use of an outsourcing service.
  3. Office Space – Should you require additional staff to cope with an increase in demand, it may well be the case that you will also need to find additional office space, and this may only be on a temporary basis.  Coping with this additional demand through the use of an outsource provider avoids this extra spend and inconvenience.
  4. IT costs – By outsourcing certain IT functions a business may be able to avoid costly hardware such as servers and PC’s (this is also true of SaaS).
  5. Software Licenses – Passing the responsibility of certain projects/tasks to an outsource company could remove the requirements to purchase expensive software licenses and possibly the hardware to run the program on.  Outsource providers will often use the latest technology to provide the best service possible without you having to purchase any software at all.

Share the risk

Outsourcing certain areas of your business’ processes will enable businesses to share the responsibilities with the provider. As they are providing the service they should be able to plan and cope with risks as part of their solution. As part of your contract, an outsourcing company should give you a guarantee of professional responsibility.

Flexibility when it’s needed

As mentioned above, seasonal demands that peak and trough put varying demands and strains on the different resources within a business. Outsourcing could provide the flexibility needed to cope with these varying demands and stabilize an otherwise stressful period for the company.  Businesses which use outsourcing will effectively have a larger workforce to cater for demand and differing skill set requirements.

How to prepare for an outsourcing agreement

  1. Gather a representative from each area of the business that will be affected/involved in the outsourcing agreement.
  2. Determine what it is that you require from the outsourcing provider, whether it is a product, service etc.
  3. Establish what information and assistance the outsource provider will require from you.
  4. Produce a document detailing all of the above

Selecting the right outsourcing provider

The Advantages Of Outsourcing

Once you have completed the above you can start to look for an outsourcing provider.  Firstly check with your current business providers as they may offer this service already.  As you have an existing business relationship with them it would be desirable to speak to them about their offerings.  You may be able to negotiate cheaper rates as an existing client and the provider will already have some knowledge of your business processes.
If you do have to research companies that you do not already have a working relationship with then contact a number of providers with your requirements.  From your initial conversations you can start to compile a short list and, after discussing further internally, you can start to contact each of the companies on your short list for a more detailed conversation and, potentially a meeting to run through your requirements in detail.

Information that you will need to provide a new outsourcing provider include;

  1. Details of your requirement
  2. Introduction and Executive Summary
  3. Company background
  4. Detailed specifications
  5. Any assumptions that you may have or known constraints (such as tight deadlines etc)

CIPHR can assist you with your HR function, including the following processes within the CIPHR suit of applications;

  • Reporting & Exporting
  • Recruitment processes
  • Onboarding
  • Training administration
  • Data entry
  • System Configuration
  • Annual processes such as holiday year and entitlement
  • Payroll administration

Click here for further details or call us on 01628 814060.