the past decade, outsourcing has become routinely and widely accepted
at Fortune 500 companies. These largest of corporations do not think
twice about asking specialized service providers to take on activities
they once performed for themselves. As a result, they have lowered
costs, improved organizational focus, and increased their speed
and flexibility. As Herb Kelleher of Southwest Airlines simply puts
it, "People who are in the business full-time can do it better
and cheaper." Essentially, outsourcing has helped corporate
America become more efficient, flexible, and nimble.
small businesses, the picture is quite different. Compared to large
organizations, small businesses are inherently flexible and nimble;
they are specialists in what they do and they do it with great passion.
What they often lack, however, is access to the types of know-how,
technologies, capital, economies of scale and other resources that
the bigger boys enjoy. Owners of small companies also face another
very challenge - making sure that they aren't so bogged down in
running the company that they are unable to focus on building the
of these unique small business considerations, the power of outsourcing
for them is not so much in redefining and reorganizing operations
for speed and efficiency as it is in enabling them to gain increased
advantage for what they are already good at.
and small businesses are alike with regard to one point: Getting
started down the road to outsourcing is often the most difficult
part. For small businesses the No.
1 inhibitor to outsourcing is the fear of losing
control. Small business owners are so accustomed to directly managing
the people, processes and technologies that make up their operations
that the notion of moving some of this to an outsider is a difficult
concept to embrace. The rewards of overcoming this fear, however,
can be well worth the effort.
outsourcing enables the small business owner to access the best
resources in the world, but to pay not only for just the slice they're
using, but also just for when they use it. And, once the owner begins
to look outside, he or she is often amazed to find the solutions
already out there for some of the most seemingly intractable problems
they face. As James Brian Quinn of Dartmouth says, "No organization
acting on its own can possibly out-innovate the world."
today's complex, sophisticated universe, the best solutions - in
all but a company's deepest area of specialization - are increasingly
going to come from outside the company. If the small business is
going to stay abreast of its competition, let alone get ahead of
it, these outside resources will simply have to increasingly be
tapped. By breaking down the barrier between the company's internal
operations and what is outside, the creativity of others permeates
the business's thinking and drives it forward.
to really see what this can mean for your company, begin by objectively
comparing the capabilities of outside specialists to existing internal
operations. An honest evaluation of the costs, quality, speed and
innovation that's available from others is likely to reveal inefficiencies
that simply can't be justified by maintaining the control that comes
from doing it all yourself. How much business value is being sacrificed
because of the perceived need to do everything inside? You may find
the answer quite surprising.
Steps to Small Business Outsourcing Success
these five steps will go a long way toward helping any small business
to objectively evaluate the potential of outsourcing and to capture
1. It's important for any small business to make sure it really
understands what it hopes to gain from outsourcing before making
by drawing up a list of the most difficult problems your company
faces. For each problem, write down the things that would have
to be done to fix them. Then, ask, "Why aren't these things
being done today?" If the answer is lack of management time,
lack of organizational expertise, lack of investment dollars,
or the potential ongoing operational cost, then outsourcing is
definitely a possible solution.
2. Start discussing the problems and the potential solutions with
outside - outsourcing - providers.
do you go to find such providers? They're actually all around.
If the problems are in the finance area, talk to your company's
accountant; his or her firm may well offer more comprehensive
outsourcing services. Many will take on direct management of the
entire financial system. If they can't do all that, ask them for
recommendations of firms that can.
the issues are in technology, have the same conversation with
consultants the company has worked with successfully in the past.
If the problems are in document creation and management, talk
to printers, designers, and equipment consultant companies that
will take an objective look into your current dealings and offer
substantial insight to your production costs. A choice used widely
by small and large businesses is the ASP market. Small business
owners are often amazed to find how many firms now offer complete,
Web-enabled business solutions right over the Internet. In fact,
the Internet is itself a great way to find potential outsourcers
for just about every aspect of a small business.
3. Once outside options begin to come into focus and the list of
potential providers begins to solidify, start actually to craft
the provider's services will be available on a fixed-fee or per-transaction-fee
basis. Take the time to work out a business relationship that
both companies will be comfortable with - one in which both can
succeed. Also, be sure to make provisions for a relatively quick
and well-defined exit process if things change.
most desirable goal is a long-term relationship supported by a
continually renewable short-term contract. This gives both parties
the ability to adjust things as business condition change.
4. The transition from inside operations to an outsourcer must be
a business owner, you are not abdicating responsibility for the
results; you are simply achieving the same or improved results
in a new, more effective way. Work with the people both inside
and outside your company to help ensure a smooth transition. Think
about how the change will affect all your employees - especially
those who are doing the soon-to-be-outsourced work - and help
them make the transition. Also, don't forget the end customer.
Where appropriate, be sure to explain what the business is doing,
why and how the change will enable it to provide even better service
in the future.
5. As the relationship between the companies moves forward, there
are three things atop the to-do list: communicate, communicate and
is not possible to over-communicate between the companies. However,
at the same time, be careful not to try to manage the provider's
business for them. Do insist on open communications both ways
on what is happening and why. Talk continuously about what is
working and what isn't. Talk about what the business might be
going to need three months from now that may be different from
what it needs today. Also, remain open to the constant flow of
innovation and new ideas - outside providers should become a constant
source of innovation.
summary, the power of outsourcing to enhance business operations
is well-understood and documented. The challenge, as always, is
one of leadership. Small business owners need to add outsourcing
to their list of business tools. In the end, it will be their ability
to create the right relationships, with the right outside providers,
for the right reasons and to then successfully manage those relationships
that will create the optimum value for themselves, their employees,
and their customers.