Why Outsourcing Works

Why Outsourcing Works

Outsourcing is for you, you just don’t know it yet. First, let’s just say that you have built a great company. It shows that you work hard, and have great staff that work very hard to get the job done. There comes a time when a goal you are working towards is not necessarily in your wheelhouse. This is a good problem to have. This means you have become the master of your domain and you have made the decision to branch out into something new so you can become the master of that domain as well. This is growth.

Justifying outsourcing

I spent a good part of my career working for someone else. During this time, as an IT executive, it was my job to make sure we made smart choices for the growth of the organization and ultimately the bottom line. I had a hard time justifying paying someone to do work that I could hire someone to do. It was a hurdle I had to get past in my own mind. I would see the billable hours and the bill rates and it was like my head was about to explode. I would think things like:

  • How can I justify paying $200 per hour for something I could do myself?
  • Who pays $50,000 for a website design when they can pay a graphic designer right out of college $50,000 for an entire year?
  • Why pay someone $5,000 to work on my network configuration, when I know I could figure it out?
  • How can I pay a $1,000 minimum for accounting integration customization work when between me and one of our accountants I know we could figure it out?
  • Who can justify paying a company for data analytics, when I’m already paying a database administrator, can’t he and I do it?

There were many of these conversations I’d have with myself over the years and many more. The truth is, that for each of these, the solution was slightly outside my comfort zone at the time. For the first part of my career, I solved the problems myself or with my team almost exclusively. This has served me well, and is a perfectly acceptable solution. I now know how to do many things I didn’t know how to do before. For the second half of my career, I learned some valuable lessons about time.

Time is the most important resource

You probably knew where I was going with this, but I had to paint the picture as best I could. I am confident in myself and my abilities. Heck, our slogan is “We solve problems!”. Time is our most important resource. Once you use a bit of time up, you’ll never get it back. It’s important that we make the right choices with our time. This is a life lesson, but very much a business lesson too.

When I would think about justifying why I should do something or hire someone to do it, I was never considering the time part of the equation. That time has a cost, and the cost reaches out into the business in many ways.

For every second I spend on a problem, I lose a second I can spend on something else that needs my attention. The same thing is true with my employees. Every moment I have them working on something outside their normal responsibilities I’ve sacrificed the time they would have spent on their normal duties. Whatever was deserving of the attention of myself or an employee is now neglected. Imagine if that cost you a customer or two. This becomes an exponential problem you cannot win. You then have to re-invest the time to get the customers back, but you lose the time to invest in new customers, and so on. You can see how this compounds itself.

Outsourcing is expert service

Time is not the only justification for outsourcing. Getting true experts to solve your problem is of value as well. Like I mentioned earlier, when I was the one acquiring skills by solving the problems myself or with my teams, I was learning, which has served me well, but at what cost? Could I have solved the problem more quickly if I outsourced? Probably. What about accuracy? I know I made my fair share of mistakes along the way building my problem solving repertoire.

This is not to say that outsourcing is perfect. There most certainly will be things that are not communicated properly, or business rules that are misinterpreted, or software bugs, or any number of things that could go awry. This happens. It happens either way. The odds are in your favor that you’ll get a better outcome using someone who has done it before. Just like when you call a plumber when your pipe bursts. Sure, you can run to the local hardware store and buy a pipe and some pipe cement and try and fix it yourself, but I’d put my money on the plumber getting it right the first try and not messing something else up in the process.

Outsourcing affects the bottom line

With outsourcing, there is a real bottom line equation for your business as well. When you outsource, you only pay for the services rendered. The billing ends at the end of the project. You are not carrying extra payroll and the payroll tax burdens, benefits, vacation, sick leave, etc., these are someone else’s problem. Not to mention there may be some tax credits or deductions for you to consider at tax time. Outsourcing may have higher costs on the surface, but digging deeper, there are plenty of savings associated with outsourcing as well.

Through outsourcing you can also see ROI (Return On Investment) quicker because of the fixed cost nature of paying for a project. Bringing projects in-house and carrying the payroll for the people working on the project can often turn into a never ending project timeline. With an outsourced project, the project scope is often better defined, which leads to a project that fulfills its purpose much quicker.

Outsourcing is the answer

Outsourcing can solve problems for your business right now. It allows you to get the right people in the right places at the right times doing the right things to continue to propel your business forward. The cost for outsourcing can be higher at face value, but with the savings in time alone, it pays for itself in spades. Not to mention the other benefits of not carrying a new employee on the payroll.

At Transcendent Software, we specialize in getting you the expert service that you need to solve your unique challenges in your business. Reach out and let us know if we can help you with your outsourcing solutions.