The economics of insourcing no longer add up
28 July 2022
Consider what you do in your business and where your business delivers value to your customers. Break away from the common conception that a high functioning business has internal teams to manage everything and ask yourself why you would hire internal team members in lieu of outsourcing functions that aren’t your ‘bread and butter’.
Instead of asking the complex questions of where your business delivers its greatest value to your customers and what resources underpin this, ask where does your business lack resources and capabilities, and what activities aren’t driving client value?
‘Stick to the knitting’ as Tom Peters says in his book In Search of Excellence. In business, Tom is saying, stick to your domain of expertise to drive success, which extends even further to your businesses value chain. So, what is your core business? And then, what can arguably be outsourced?
In other words, what resources aren’t related to the core value you are providing your customers?
I’m sure as a business owner you are well aware that the Australian economic landscape is continuing to shift in unprecedented ways.
Lowest unemployment rate for 50 years amongst talk of the Great Resignation, rising wages, changed employee expectations and record low immigration have all resulted in an imbalance between supply and demand.
Rapidly rising inflation (currently sitting at 6.1% in Australia, 7.3% in New Zealand).
Higher interest rates which appear to be on an upward trend.
This all adds up to one thing: business cost pressure. Take a moment to re-consider elements of your value chain and how you can manage costs and risks.
Abilities & Specialisations – who can deliver the services your business needs to run? Are only staff capable of completing tasks or can they be managed externally? Can better technology be leveraged?
Quality Controls – if an aerospace engineer asked you to check their equations, would you be able to? Consider the oversight you can provide for tasks outside your understanding, and the higher levels of expertise the right outsource provider can offer.
Price – are the on-boarding responsibilities, resources required for training and costs of hiring a full-time employee the most effective solution compared to other, more flexible, agile engagements?
Key Person Risk – If key individuals had a planned or unplanned absence, could your business function without issue? Often outsourced teams are better placed to deliver consistent work without such disruptions.
Outsourcing isn’t always the answer, especially when it comes to your core business and where you provide value to your customers, but it does make sense for those elements that need to happen, that aren’t providing your customers value and are taking up more resources than necessary.
The success, if not the survival, of your business in the current economic environment, is predicated on how you best utilise your resources and capabilities. More so than ever before, the economics point to outsourcing your non-core business activities via trusted suppliers.
Delivering a range of outsourced financial management solutions, at Visory, we often see businesses come to realise over time that it’s the day-to-day dealings of their back office which cause so many headaches for little value in return. With the option to mitigate many of the above considerations, outsourcing specialised tasks that are key to business dealings often results in reduced business cost pressures whilst also granting many owners something they can’t easily find - more time.
When engaging with customers, we are aware of the importance of relieving these pressures, which is why an initial focus of our work is centred around not just completing your bookkeeping, payroll or other back office tasks, but also ensuring your systems, processes and operations are running as efficiently as possible for long term value. We take care of the back office so you can do what you do best - deliver value to your clients or customers through core business activity.
For more information on how outsourcing can help your business, contact Visory today.
Author - Brett Ebedes