Contact Us    Locations    01/07/2009

Focus on What You Do Best

Most people think of outsourcing as medical transcription done in Bangladesh, or computer tech support delivered from Asian call centers. It might surprise many to learn that a growing percentage of businesses of all sizes already use “outsourcing” without realizing it.

Payroll and accounting (bookkeeping) services are used by millions of businesses. Until the 1970s, most businesses handled these functions internally. Advertising and marketing functions also are frequently outsourced, as is most telemarketing.

“The positives far outweigh the negatives for this kind of outsourcing,” said Craig Harris, a construction business owner who formerly worked for ePEO LINK, an employee leasing and human resource administration firm. “It’s really a question of economies of scale and smart allocation of resources. You’re not making any money on the time you or an employee spends handling all that paperwork—and it’s eating up your energy and focus. Until you are really large, outsourcing is a way to allow a small employer to concentrate on what they do best.”

A small but growing percentage of businesses use a form of outsourcing called “employee leasing,” in which most of their workforce become employees of a firm set up to handle all their human resource and payroll administration needs. But employee leasing organizations can handle more than paperwork.

“They can lower your costs significantly,” Harris said. “They have the advantage of negotiating with insurers on behalf of hundreds or even thousands of employees for health care benefits and workers compensation,” he explained. “They’ll almost always be able to get a better deal than you can.”

Harris recommends that most small businesses considering employee leasing, especially start-ups. “The paperwork surrounding setting up a business is one of the biggest costs you’ll incur,” he said. “And you don’t need those kinds of headaches when you’re trying to get everything else together.”

Harris has several tips for anyone considering outsourcing:

• Choose a vendor who has been in business at least three to five years.
• Use one that offers as many services as possible, even if you don’t intend to use all of them. You may change your mind later, and it’s easier to work with fewer vendors.
• Check references from customers who have been with the vendor two or more years. This will ensure you’re getting a true picture of how well they deliver.
• When you think you’ve found the right vendor, ask for a list of clients who terminated their services. Call and ask them why, and then ask your selected vendor to explain as well. No one is perfect; but even if you decide to go ahead with them you may start out with better insights about how to work together successfully.

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