Source : Click
For small businesses trying to grow as painlessly as possible, outsourcing non-revenue-producing business functions makes a lot of sense.
That's the conclusion of a new report from Achilles Group titled "2008 Small Business Outsourcing Best Practices Guide." The report found that most businesses with 25 to 250 employees outsource at least two business functions. The most outsourced processes are payroll, accounting, ERP (enterprise resource planning), point-of-sale, CRM (customer relationship management), SFA (sales force automation) and human resources management, recruiting, benefits administration, performance and compensation management, and time and labor management.
According to the report, companies with fewer than 50 employees tend to outsource payroll, benefits, recruiting, bookkeeping, IT desktop and e-mail, Web site and online marketing, financial engineering, IT network administration, and marketing and lead generation. Companies with up to 250 employees might add HR director outsourcing and talent management, while companies with up to 1,000 employees might further add Human Resource Information System, CIO/IT strategy and compensation planning.
Unlike larger companies, which outsource to save money, small businesses turn to outsourcing so they can focus their limited resources on core competencies. According to the report, the top reasons small businesses outsource is to free up executive time and enable on-demand access to specialist expertise not available internally. Other reasons include reducing costs, gaining access to best practices processes and best-of-breed technology and tools, gaining the ability to scale more efficiently, and improving performance.
Another related option is shared services, run by a third party, in which a business consolidates common corporate administrative systems and functions with those of other organizations. Like outsourcing, the shared services approach offers specialist expertise and cost savings, along with better compliance and access to best-in-class technologies and processes. According to Achilles Group's research, more than 60 percent of companies taking the shared services approach experience improved customer satisfaction, staff productivity and overall quality. They also reduce costs by 20 to 80 percent.
The most successful small businesses pick and choose which functions to outsource or commit to shared services, the report said. As an example, some organizations outsource HR functions for a limited time, while they build the processes and infrastructure they will need to bring the process back in-house in the future.
Because businesses often use outsourcing to help themselves grow, it makes sense that once that growth has been achieved, some companies choose to bring some processes back in-house. Doing so can help improve control once the organization has stopped growing and has reached maturity, the report said.
The combination of insourcing and outsourcing—and the ability to move back and forth between the two as necessary—can help small businesses achieve the goal of growing stronger and more self-sufficient, while remaining flexible and correcting or avoiding common mistakes, the report concluded.
For small businesses trying to grow as painlessly as possible, outsourcing non-revenue-producing business functions makes a lot of sense.
That's the conclusion of a new report from Achilles Group titled "2008 Small Business Outsourcing Best Practices Guide." The report found that most businesses with 25 to 250 employees outsource at least two business functions. The most outsourced processes are payroll, accounting, ERP (enterprise resource planning), point-of-sale, CRM (customer relationship management), SFA (sales force automation) and human resources management, recruiting, benefits administration, performance and compensation management, and time and labor management.
According to the report, companies with fewer than 50 employees tend to outsource payroll, benefits, recruiting, bookkeeping, IT desktop and e-mail, Web site and online marketing, financial engineering, IT network administration, and marketing and lead generation. Companies with up to 250 employees might add HR director outsourcing and talent management, while companies with up to 1,000 employees might further add Human Resource Information System, CIO/IT strategy and compensation planning.
Unlike larger companies, which outsource to save money, small businesses turn to outsourcing so they can focus their limited resources on core competencies. According to the report, the top reasons small businesses outsource is to free up executive time and enable on-demand access to specialist expertise not available internally. Other reasons include reducing costs, gaining access to best practices processes and best-of-breed technology and tools, gaining the ability to scale more efficiently, and improving performance.
Another related option is shared services, run by a third party, in which a business consolidates common corporate administrative systems and functions with those of other organizations. Like outsourcing, the shared services approach offers specialist expertise and cost savings, along with better compliance and access to best-in-class technologies and processes. According to Achilles Group's research, more than 60 percent of companies taking the shared services approach experience improved customer satisfaction, staff productivity and overall quality. They also reduce costs by 20 to 80 percent.
The most successful small businesses pick and choose which functions to outsource or commit to shared services, the report said. As an example, some organizations outsource HR functions for a limited time, while they build the processes and infrastructure they will need to bring the process back in-house in the future.
Because businesses often use outsourcing to help themselves grow, it makes sense that once that growth has been achieved, some companies choose to bring some processes back in-house. Doing so can help improve control once the organization has stopped growing and has reached maturity, the report said.
The combination of insourcing and outsourcing—and the ability to move back and forth between the two as necessary—can help small businesses achieve the goal of growing stronger and more self-sufficient, while remaining flexible and correcting or avoiding common mistakes, the report concluded.
