With a looming recession in Australia, companies are being forced to re-evaluate their plans and take proper precautions to guarantee smooth sailing through challenging conditions. In fact, many organisations are already facing hiring freezes.
This might help significantly in cutting operational and employment costs, but lack of expert personnel can be a big sacrifice to make. Smaller creative teams often feel overstretched in these conditions and are pulled away from their core areas of focus.
So what’s the best solution in tough times like these?
The steps aren’t always clear but there is one strategy that could greatly help your business out: outsourcing.
What is Outsourcing?
Outsourcing is a common business practice of farming out services or critical job functions to a third party. This practice has become more and more common and holds many benefits for companies.
When managed responsibly, outsourcing can help your business grow, improve the overall quality of service that your company provides, and relieve pressure.
Outsourcing is typically used to compliment a core team of employees, not to replace them. The outsourced talent are an extension of your team, and enable you to manage the ebbs and flow of workloads required to manage internal and external stakeholder expectations.
Popular functions that companies outsource include IT services and support, administration, compliance support and HR services, as well as creative services and marketing.
5 Benefits of Outsourcing during a Recession
There are many benefits to outsourcing. Here are five key benefits that might persuade you to take the leap.
Cost reduction is probably the most alluring benefit of outsourcing practices.
By selecting the right supplier, companies can still experience the advantage of skilled personnel and updated tech, while paying much less than if they were to hire in-house employees.
Operational costs are also lower. Companies will save money on workspaces, equipment, hiring, training and retention costs.
Reduces Chance of Burnout
Outsourcing can help protect in-house employees from burnout and reduce collateral errors. During a recession, companies typically downsize their staff or implement a hiring freeze.
In this case, in-house creatives will take on more responsibility, and perform tasks outside of their area of expertise. For the short-term, this might work just fine, but after a while your employees risk burnout and might therefore commit costly errors.
By relying on an outsourced talent-pool, organisations can avoid this risk and keep productivity alive.
Improves Efficiency and ROI
Third-party service providers often specialise in the exact functions companies are looking to fill. By outsourcing, companies save time on on-boarding and training newly hired in-house staff.
Further, a smaller creative team will experience a weight off their shoulders and will be more available to focus on key tasks.
Overall, it is a visibly obvious way to increase your ROI and retain the quality of your service and work ethic.
Upscaling and downscaling can be done more easily when partnered with a third-party service, and provides companies much needed flexibility during a recession.
While laying-off in-house employees is unpopular and can cost the company some ill-will, upscaling and downscaling outsourced staff is less dramatic and can be accomplished with less complications.
Just make sure your trading terms and conditions are clearly defined and are being met properly.
Forming partnerships with third-party suppliers is strategically beneficial even in times of economic stability or growth.
In a recession, however, it becomes almost a necessity. By cultivating these lucrative partnerships and forming long-term strategy around this practice, your company will be much more prepared for whatever market conditions you face. They can support the overflow of work needed in busy and prosperous times and provide the skills set you need for specific tasks when business is more challenging.
Already having these relationships in place when hard times hit will prove invaluable.
How to Outsource Strategically and Responsibly
We now know the benefits of outsourcing, but how should one go about outsourcing successfully?
Define your objectives
Before anything else, identify why your company wants to outsource. Is it to cut costs, leverage global talent or mitigate risks?
Clearly defining your objectives will present clarity to your team and will help avoid any misunderstandings down the line.
Further, identify exactly what functions or tasks you want to outsource. The development of a strong business case to demonstrate improved efficiency and profitability is essential if you are considering outsourcing critical business tasks or processes. For creative and marketing support you should consider outsourcing functions or projects that could be best executed by others.
Select the right supplier
Selecting the right partner is crucial, and should not be done thoughtlessly. Most off-shore contracts are long-term, so negotiating a deal that is beneficial for both you and the supplier is important.
A good first step is to research prospective suppliers, compare their services, costs and reputation. Once you’ve narrowed the list down, you can choose a provider.
Being explicit about your contract and your expectations will ensure a lasting strategic relationship.
Bigger isn’t always better
Think small. Don’t settle on the biggest provider just because you think they can offer you more.
These days, companies can be more discerning and often go for smaller providers that can offer the specific expertise you’re looking for.
Make sure to measure your performance
Use key performance indicators (KPIs) to appropriately measure your performance as it relates to outsourcing. Determine what metrics matter to your company and continually monitor them to see what progress you’re making.
Be studious about your data so you can gain awareness of exactly how outsourcing is impacting your performance and growth.
Hard times are coming, and outsourcing is a great way to help your company get through a recession smoothly. From cutting costs to tapping into a valuable talent-pool, outsourcing holds many benefits.
Make sure to decide who you partner with responsibly, and be informed about what your objectives are, and what providers can supply you.
Yes, the path is full of potholes these days. But there are always creative ways to help drive through this bumpy road.
Remember to take a breath, keep calm and outsource.