As a starting point, it is always best to look at processes that are repetitive, resource intensive and/or easy to standardise.

Risks

Some processes will have confidential information within them and some will require expert decision making. These could be areas you want more control of.

A great way to do this is to outsource tasks but retain control of important decision making. 

For example:

• Outsource data entry but keep customer strategy in house
• Outsource preparing bookkeeping but keep financial planning in house
• Outsource updating products but keep pricing in house
• This can help to lighten the workload whilst maintaining control.
• Measuring your cost savings correctly

You should never just compare the cost of outsourcing with your salary. Instead calculate your total internal costs which could be:

• Salary
• Benefits
• Recruiting
• Training
• Software
• Hardware
• Office costs
• Management
• IT support
• Fixing errors

Then calculate your total cost of outsourcing including:

• Costs to provider
• Time to move over
• Internal management
• Quality control
• Communication
• Extra Software

Now you have the two totals you can properly compare. A basic formula is:

Potential savings = Total Internal Costs – Total Outsourcing Costs

However this isn’t the only thing you should look at. You should also look at:

• Time Saved
• Cost Per Transaction
• Turnaround Time
• Error Rate
• Productivity
• Quality of Output

Sometimes a solution that saves you a little more may actually give you more value for money as it will save you more time from your employees or produce more accurate work.

Common Mistakes to Avoid When Outsourcing

While outsourcing can help save you money, it can be easy to lose this if you’re not careful.

• Choosing the cheapest option
• While cheaper is very tempting,
• The quality will be poor leading to reworks which is costing you money.
• Look at the overall value of the outsourcing.

Outsourcing a broken process

Even if your internal process is confusing, this doesn’t mean that it will improve by outsourcing. Before moving processes, make sure that:

Your workflow is fixed.

You have documented what each step is.

Not taking data security into consideration.

Some back office processes may contain sensitive customer, staff or financial data. Before sharing any important data ask providers about: