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Outsourcing: the advantages and disadvantages for your trade business

Outsourcing administrative tasks can be a beneficial strategy for many businesses. But it's not without risk. Wondering whether it's the right choice for your trade business? We weigh up the advantages and disadvantages of outsourcing to help you decide.

Outsourcing: advantages and disadvantages

There are many different tasks that are crucial to the success of your business outside of your key service offering.

While you may have trained in a particular speciality, for example, electrical work, as a business owner, you’ll also need a selection of other skills, such as bookkeeping and accounting.

But this is when outsourcing can be a really useful strategy; taking the time-consuming tasks off your hands, allowing you to focus on delivering quality work for your customers.

In this post, we’ll look at the pros and cons of outsourcing to help you make an informed decision as to whether it’s right for your trade business.

4 pros of outsourcing work

Here are some of the key reasons why many business owners choose to outsource:

Improved focus on core business activities

As we all know, there are only so many hours in the day.

Choosing to outsource more time-consuming tasks, allowing you to focus on your core business activities, can help you to be more productive and efficient.

Increased competitive advantage

Freeing up your time from administrative tasks helps you to focus on strategic planning to help build your business.

For example, investing time in your marketing strategy or a business development plan to drive future growth and success.

More cost effective

Many small and medium-sized businesses don’t have the resources to hire employees.

Outsourcing work saves you money on everything from hiring to onboarding, training, and benefits.

It also gives you access to skilled professionals who can complete tasks at a lower rate than the comparative cost of a part-time or full-time employee.

Access to expertise

Outsourcing connects you to specialists that you might otherwise struggle to access or afford, which carries many benefits in itself.

  • Contracting work out to an expert means the task will be handled with accuracy and precision, in a timely manner
  • It can help to make your business more agile; easily adapting to changing market conditions or challenges, by leveraging your contractor’s expertise
  • It can help to make sure your business stays up-to-date with regulations and best practices, for example, in regard to tax and compliance

4 disadvantages of outsourcing

As with everything, there are some disadvantages to outsourcing.

Less control

When you outsource tasks to a third party, for example, a telephone answering service, you rely on an external supplier to complete that task for you.

In someone else’s hands, you won’t have full control over how the task is completed, which could lead to problems if it’s not done to the standard you expect.

Communication issues

Depending on the setup of the individual or company you outsource work to, you could face challenges with communication.

For example, if you outsource your bookkeeping to an individual who works part-time, you may incur delays if you need assistance outside of their core hours.

Security concerns

Bringing an external supplier into the fold will often mean entrusting that company or individual with sensitive information such as financial records and customer data.

This could pose a significant risk to your business if you outsource to a company that doesn’t have solid data protection measures in place.

Management difficulties

With an employee, you have control over their working hours and schedule, and the desired output. You also have visibility over your entire business operation.

When you outsource tasks, you’re reliant on your outsource partner to complete the work, and as such, you’re reliant on their schedule.

There’s also the risk that the outsourcing partner could go out of business or experience difficulties, which could negatively impact your business.

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Benefits and drawbacks of outsourcing

In summary, there are both benefits and drawbacks to outsourcing.

While it can be a really useful strategy to help free up your time, focus on your core business activities, and tap into invaluable expertise, there are some potential downsides too.

Outsourcing can open up your business to security risks, and you will need to accept that you have less control over how the work is completed and the standard of the output you receive.

That said, these negatives can be managed by investing time in selecting the right outsourcing partner:

  • Look for a company or individual who has a proven track record of success or who comes highly recommended
  • Ask what data protection measures and insurance the contractor has
  • Check their level of expertise by asking about their qualifications and experience

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FAQ

What are the advantages of outsourcing to employees?

The advantages of outsourcing include being able to focus on your core business activities, increasing your competitive advantage, and it can be more cost-effective than hiring employees. You can also tap into expertise you might otherwise not have access to.

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Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.

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