Process Outsourcing 101

outsourcing is all about freedom

Outsourcing frees you up for other activities

When I sometimes used to read articles talking about outsourcing HR functions, and I was quite puzzled. I can’t imagine the majority of the work I do on a daily basis being handled outside our organization. However, as we continue to grow, we are looking for opportunities to hand off non-critical tasks to outside vendors, brokers, and consultants. So how do you decide what to give away?

The point is to look for areas that can be streamlined, automated, or handled externally without impacting your core competencies. 

If you’re known for great customer service, you wouldn’t outsource your customer service function. If your amazing inventory and shipping team was a differentiator for your business, you wouldn’t suddenly cut that out and have a 3rd party handle it without a good reason.

But how does that apply on the business operations side of things?

A good example in the finance/accounting realm is accounts receivable factoring exchange. Firms offering these types of services will work with companies to buy their invoices for a discount, and then they work with the customer to complete the transaction. For participating as the middleman in the transaction, the invoice factoring firm receives a percentage of the paid invoice value as commission.

Would anyone ever use a service like this? Certainly! For smaller companies with few staff available to chase down payments from customers, this frees up staff and resources to invoice more often and get more money rolling in. The same basic principle is also true within HR/recruiting.

A few examples

  • Benefits: Would you be best served by finding a broker to handle your benefit needs?
  • Recruiting: Maybe finding a contract recruiter would give you the breather you need to catch up on some of the critical HR tasks on your plate.
  • Compliance: It could be that you’re so slammed with the day-to-day activities that you need to bring in a consultant to help you get current on some overdue compliance issues.

And these are just a few of the examples of ways that companies use outsourcing on a daily basis. Another valuable reason to use some of these resources is if the focus area isn’t one your organization focuses on. For instance, if we were suddenly tasked with recruiting blue collar employees, we’d probably have to get an external recruiter to help. We just don’t have the systems, relationships, and infrastructure in place to handle those types of employees at this point. And trying to establish that on the front end would be costly and time consuming.

So, while I originally thought that outsourcing in HR seemed like a strange idea, I’ve now come around and actually look forward to developing vendor partnerships that allow us to save time and resources while still utilizing experts in our field.

Do you use some sort of outsourcing in your department? In what capacity? Has it been worth the investment?

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