Which Business Functions Should SMEs Outsource?

Startup companies and small to medium-sized enterprises (SMEs) face a promising future. At their disposal lies nearly limitless opportunities, thanks to a wide range of digital innovations and technological tools that let them work faster and smarter.

For instance, the prospect of an entrepreneur collaborating with someone halfway around the world might have been thought of as an absurd and unachievable idea half a century ago. Today, however, this has become the standard.

What can outsourcing do for startups and SMEs?

Outsourcing has been rapidly gaining adoption and, in some cases, the preference among startups and SMEs to grow their business. While outsourcing has numerous benefits for organizations of all types and sizes, startups and SMEs, in particular, can greatly benefit from collaborating with a reputable outsourcing services provider or outsourcing consultant.

Non-core activities can be outsourced to free up time for core business activities and get more things done, especially if you consider how the pandemic has prompted the remote work setting for millions of employees worldwide. With few employees on-site to work on various tasks, SME and startup owners can leverage hiring a third party to support their daily operations. 

Here are notable advantages of outsourcing for startups and SMEs:

  • Better scalability of operations

One of the financial expenditures that may be challenging to recoup for growing companies is related to hiring full-time staff in the early phases of the business.

By outsourcing, startups and SMEs are relieved of the burden of hiring people they may not require for the long term or on an ongoing basis. Outsourcing enables entrepreneurs to operate with extra, professional hands-on support as needed, resulting in greater flexibility and lower labor costs.

  • Improved cost-efficiency

Outsourcing to a reputable vendor can be extremely beneficial in saving time, effort, and money. Companies might incur high costs if they were to run their contact and fulfillment operations. In contrast, outsourcing provides more efficient budgeting without the need to spend on expensive technology or personnel training. 

  • More focus on core responsibilities

Most startups and some SMEs start with fewer employees, giving them specific roles and responsibilities. However, as a company grows, the list of tasks also adds up, but the number of employees does not always increase at the same rate. The unfavorable outcome is that existing employees are taking on more duties, resulting in less optimal job performance. 

  • Faster adaptability to trends

You can use outsourcing to expand to new markets without requiring huge capital. By having access to a team of professionals, you can readily respond to current industry trends. 

For instance, suppose you own a computer company and want to start making smartphones. Using an in-house workforce could be time-consuming – not to mention costly – endeavor. 

12 Business Functions or Processes That SMEs Can Outsource

  • Research and development (R&D)

You’re unlikely to progress if you lack the resources or manpower to supply you with valuable business insights. Market research, surveys, and analyses are important aspects of business improvement.

But, since research and development take time, it’s in your best interest to hire experts to conduct the work for you. Apart from achieving the results you want, you’ll also have access to the processes and tools used by your outsourcing partner.

  • Customer service

Another common business function that is outsourced is customer service. This strategy is practical because you won’t have to worry about hiring additional staff, offering office space, or training them from scratch. You can rest assured that your provider’s customer service representatives are already adept and proficient in handling and resolving queries.

  • Accounting and bookkeeping

An SME that considers outsourcing accounting and bookkeeping can save a great deal of time. Dealing with financial transactions can be arduous and taxing, but these business processes are necessary, and someone’s got to do it. It’s wiser to delegate these responsibilities to finance professionals, as trying to manage everything can keep you from working on other priorities.

  • Payroll processing

Processing monthly salaries can also be time-consuming if your business has many employees. We’re not just talking about paychecks here—taxes, leave credits, loans, bonuses, and other benefits are all part of the package. Moreover, Outsourcing payroll processing may be able to assist you in resolving issues for your employees.

  • Human resources

Employee management entails various complex processes. As such, you must successfully manage your HR functions. You may outsource these tasks to a business that specializes in human resource management.

  • Administration

Administrative functions can impede your staff or yourself from focusing on more important issues. Outsourcing back-office activities to skilled vendors can help you maximize your time and resources. Another, you may consider hiring online virtual assistants if you only need a couple of employees to do administrative work.

  • Production and manufacturing

If your business has merchandise that needs to be mass-produced and manufactured, the cost of having a manufacturing facility can be a challenge since it requires a great deal of money and resources. 

But with outsourcing, you can delegate all the manufacturing and production work to your provider without going overboard budget-wise. 

  • Marketing and creative services

Creating a marketing plan can be tough. Considering that customer behavior continues to change, having the viewpoint and up-to-date skills of marketing and creative experts can help you improve your marketing efforts. Various solutions, such as social media marketing, data analysis, and even AI marketing technologies, can be outsourced.

  • Programming and IT services

Programming and IT skills can take a long time to learn and integrate into business operations. Performing these on your own or assigning them to in-house personnel who are not industry experts will cost your company money. By contrast, outsourcing these highly specialized services can help your firm thrive.

  • Tax preparation

Compliance with government regulations is a prerequisite for any business entity. However, tax management is a responsibility you may be better off delegating. You can find tax specialists or advisors to help you with this task. Many reputable outsourcing providers have tax services at affordable rates.

  • Logistics and shipping

Logistics and shipping services have grown in popularity along with e-commerce.  Nowadays, you no longer have to build logistics and shipping facilities. Instead, you can outsource these tasks and concentrate on developing your products.

  • Legal services

Outsourcing legal processes can help you cut costs or billable hours. Your SME can benefit from doing this because these services are less expensive. When you outsource legal processes, you’ll only have to spend money on what you hired a provider to perform without needing to compensate full-time workers.

It’s Your Call

The decision is yours to make. Should you or should you not outsource? Perhaps the question is how rapidly you want to progress. Are some functions taking up a lot of your company’s time and money? That should help you determine whether outsourcing can be the strategy that will help you maximize your resources while attaining your business goals.