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Outsourcing for SMEs

Out Sourcing for SMEs

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For many Small-Medium Enterprises (SMEs), outsourcing is the practice of using external firms to handle work and tasks that are normally performed within the company itself.

Small companies will sometimes look to outside firms to perform tasks such as payroll processing, accounting, distribution and many other important functions. Most of the time, it is because the company itself does not have a choice.

Many larger companies have also turned to outsourcing to cut costs. In response to those needs, there have been entire industries that have evolved to serve the needs of the companies’ outsourcing needs.

But not many businesses thoroughly understand the benefits of outsourcing. While it is true that outsourcing can save money, that is not the only or even the most important reason to do it. As many companies realised during the outsourcing ‘outbreak’ in the early 1990s, outsourcing too much can lead to an even bigger mistake that not outsourcing any work at all. A flat economy has caused many companies to resort to huge lay-offs and subsequently outsourcing functions that were better kept in-house. Well timed and managed outsourcing however, can provide a number of long term benefits.

Increase efficiency

For a company to be capable to do everything themselves, they will incur a much higher research, development, marketing and distribution expense, all of which will be passed down to the end user. An outsourcer’s cost structure and economy of scale can give your company an important competitive advantage.

Control Cost

Cost cutting many not be the ONLY reason to outsource, but it is certainly a very important one. Outsourcing converts fixed costs into variable costs and allows you to avoid large spending in the early stages of your business. Outsourcing can make your company more attractive to investors for the simple reason being that you are then able to channel more funds into revenue producing activities.

Reduced labor cost

Hiring and training new employees for short term projects can be very costly to a small company and casual employees can be a challenge to manage. Outsourcing allows you to channel all your focus to where your business needs it most.

Focusing on core business

Every business has limited resource and it is even more pertinent when it comes to small enterprises. Following the same vein, every manager also has a limited amount of time and more importantly, attention. Outsourcing can help the business shift its focus from low value activities toward the kind of work that will bring the best results for the company and the customers they serve. It can also help greatly for managers who are trying to get their priorities right.

Get new projects off the ground quickly

A quality outsourcing company should have resources to help their clients start new projects right away. If a business were to handle the said project in-house, it might involve weeks to months of planning, strategizing and finally implementing. This will take even longer if do not have the human resources required for that project as hiring and training will take additional time. The startup process can be made further complicated if it requires major capital investments.

Reduce risk

Most if not every business investment will carry with it an element of risk. Markets, competition, government regulations, financial conditions and technologies all change very quickly. When you appoint an outsource company, they will assume that element of risk and are generally much better at deciding how to avoid and alleviate the risk in their area of expertise.

Level the playing field

Generally, small medium enterprises experience great difficulty to match the in-house support services that the larger companies can afford. By outsourcing, smaller companies are able to act “big” by being enabled to access to the same economy of scale, efficiency and expertise that large companies enjoy.

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Maresa Ng – Asia's Top Business Growth Specialist

As Entrepreneur, Author, Investor, Professional Speaker, and ActionCOACH Asia Master Coach Trainer, Maresa has grown several of her own businesses and has worked with hundreds of entrepreneurs, business owners & CEOs to succeed in turning around their businesses. She is the author of MPH Masterclass Guide to Starting a Business. Having spoken in over a dozen countries regionally, her business-building-seminars have touched the lives of thousands of business people and entrepreneurs. Maresa had achieved Top 3 Firm Builder in Asia Pacific in year 2015, and maintained Top 100 Global Coach in 2012 and 2013. One of her businesses was awarded SME100 Fastest Moving SMEs by SME & Entrepreneur Magazine in 2012. Her track record of both successes and failures has led her to be one of the most prominent business speakers and experts in the region. Described mainly as businesses secret-weapon, Maresa has the strategic and tactical ability, energy and passion to take entrepreneurs and businesses to the next level. Visit www.maresang.com and transform your business today.

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