What is Outsourcing (and why does it matter to small business)?

what is outsourcingOutsourcing refers to the business habit of transferring work projects and tasks to outside providers. It is a cost-saving strategy when it is cheaper to purchase the work rather than complete it internally.

Outsourcing has gotten a bad rap over the years. Too many people think it refers to sending jobs overseas. (“Off-shoring” would be a better word for that.)

Can you give me an example?

A mega-company might outsource the manufacture of its product components. But, a small business may find value in contracting with a provider to do payroll or keep financial books.  You can find more textbook and scientific answers to the question of “what is outsourcing?” here.

How does this apply to my small business?

There is a universe of outsourcing services out there, but small and growing businesses may be interested in outsourcing opportunities with:

  • Specialist Independent Contractors: You might contract for work creating and maintaining your website, maintaining your social media identity, creating your marketing and advertising materials. I find many owners feel unqualified to do payroll, taxes, or insurance.
  • Virtual Assistants: You might outsource work on a continuing basis to a virtual assistant who performs specific repetitive tasks. They might create and maintain your appointment and travel schedule, administer databases, or handle customer service.
  • Online Business Managers: You might want to conduct the majority of your administrative and operational functions through an online business manager. Online business managers are responsible for broad oversight and delivery of your needs. They manage the people, processes, and projects necessary for your success.

Each of these outsourcing categories represents independent contractors who may work alone OR with others. You may pay them by the hour, by the project, or by retainer. Because they are not on your payroll, you save the labor burden of taxes and benefits.

Whether or not outsourcing is right for you depends on your unique situation.  A well-planned strategy is vital to success – that’s why you’re on this site, right?


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