outsource business plan

How To Write a Business Plan for IT Outsourcing Company in 9 Steps: Checklist

By alex ryzhkov, resources on it outsourcing company.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan

Welcome to our blog post on how to write a business plan for an IT outsourcing company in 9 easy steps. In today's fast-paced technology-driven world, the demand for IT services continues to grow at a rapid pace. In fact, according to recent statistical data, the global IT outsourcing market is projected to reach a value of $413.7 billion by 2021, with North America being the largest market in terms of revenue.

So, if you are considering starting your own IT outsourcing company, now is the perfect time to capitalize on the industry's growth and establish a successful business. To help you get started, we have curated a comprehensive checklist of 9 essential steps to guide you through the process of writing a business plan that will set the foundation for your company's success.

Let's dive right in and explore each step in detail, starting with conducting market research. By understanding your target market and analyzing your competitors, you will be able to identify opportunities and challenges that will ultimately shape your business strategy. This knowledge will allow you to determine your core services and offerings, define your business objectives and goals, and develop a pricing strategy that reflects the value you provide.

Next, we will delve into creating a marketing and advertising plan to effectively promote your services to potential clients. This plan should be tailored to your target market, highlighting the unique advantages of your company and positioning you as the go-to IT outsourcing provider.

Establishing a legal structure is also a crucial step that ensures compliance with relevant regulations and protects your business interests. Additionally, creating a financial plan and projecting budgets will allow you to effectively manage your resources and make informed business decisions.

By following these 9 steps, you will have a comprehensive business plan that outlines your IT outsourcing company's path to success. So, let's get started and turn your entrepreneurial dreams into a thriving reality!

• Conduct market research
• Identify target market
• Analyze competitors
• Determine core services and offerings
• Define business objectives and goals
• Develop a pricing strategy
• Create a marketing and advertising plan
• Establish a legal structure
• Create a financial plan and project budgets

Conduct Market Research

Market research is a crucial step in developing a business plan for an IT outsourcing company. It provides valuable insights into the industry landscape, potential customers, and competitors. By conducting thorough market research, you can make informed decisions and create a solid foundation for your business.

When conducting market research, it is essential to gather relevant and up-to-date information about the IT outsourcing industry. Look for industry reports, market trends, and forecasts to gain a comprehensive understanding of the current market conditions and future opportunities.

Market Research Tips:

• Identify your target audience and gather data about their needs, preferences, and pain points.
• Analyze industry trends and technological advancements to identify potential service offerings and areas for growth.
• Study your competitors' strengths, weaknesses, and market positioning to develop a unique selling proposition.
• Engage in surveys or interviews with potential clients to validate your business concept.
• Gather data on pricing structures, customer acquisition costs, and revenue potential to develop a realistic financial plan.

Additionally, consider identifying your target market during the market research phase. Understanding your potential clients' specific needs and pain points can help tailor your services to address those needs effectively. This knowledge will also assist in creating a targeted marketing and advertising plan.

By investing time and effort into conducting thorough market research, you can identify industry gaps, refine your business model, and develop strategies to differentiate your IT outsourcing company from the competition. This knowledge will prove invaluable as you move forward with creating a comprehensive business plan.

Identify Target Market

Identifying your target market is a crucial step in developing a successful business plan for an IT outsourcing company. By understanding who your potential clients are, you can tailor your services and marketing efforts to meet their specific needs and preferences.

When identifying your target market, consider the following:

• Industry focus: Determine the industries or sectors that are most likely to require IT outsourcing services. For example, you may choose to target healthcare organizations, financial institutions, or technology startups.
• Company size: Define the size of companies that would benefit most from your services. Are you targeting small businesses, mid-sized enterprises, or larger corporations?
• Geographic location: Determine whether you will focus on local clients or expand your reach nationally or even internationally.
• Specific needs: Identify the specific IT needs and pain points of your target market. This could include areas such as software development, cloud computing, IT infrastructure, or cybersecurity.

Tips for Identifying Your Target Market:

• Conduct market research to gain insights into your potential clients' behavior, preferences, and challenges.
• Segment your target market based on industry, company size, location, and specific needs.
• Utilize online tools and platforms to gather data and analyze market trends.
• Speak with industry experts and professionals to gather insights and validate your target market assumptions.
• Keep your target market definition flexible and be open to adjusting it based on market feedback and changing trends.

Analyze Competitors

When starting an IT outsourcing company, it's essential to analyze your competitors to understand the market landscape and identify opportunities for differentiation. By studying your competitors' strengths, weaknesses, and strategies, you can position your business for success. Here are some important steps to follow:

• Research and identify your direct competitors in the IT outsourcing industry. Look for companies that offer similar services and target the same client base.
• Examine their service offerings and pricing models. What specific IT services do they provide? How do they package and price their services? Are there any unique features or value propositions they offer?
• Analyze their target market and customer base. Who are their main clients? Do they focus on specific industries or cater to a broader range of businesses? Understanding their client demographics will help you identify gaps and potential areas for specialization.
• Consider their reputation and customer feedback. Online reviews, testimonials, and case studies can provide valuable insights into how well their clients perceive and value their services.
• Assess their marketing and advertising strategies. How do they promote their services? Which channels do they utilize, such as social media, content marketing, or industry events? Understanding their marketing tactics can help you shape your own marketing plan.
• Analyze their online presence, including their website, blog, and social media profiles. Take note of their branding, messaging, and user experience. Identify areas where you can differentiate and improve.
• Consider reaching out to former clients or industry connections to gain additional insights about your competitors.
• Keep an eye on emerging trends in the IT outsourcing industry and monitor any new entrants that may pose a threat or offer innovative solutions.
• Continuously reassess and update your competitive analysis as the market evolves.

Determine Core Services And Offerings

Once you have conducted market research and identified your target market, it is crucial to determine the core services and offerings that your IT outsourcing company will provide. This step involves carefully analyzing the needs and preferences of your target market and aligning your services accordingly.

1. Assess the market demands: Consider the specific IT services that are in high demand within your target market. Are clients seeking software development, network setup, cloud computing, or cybersecurity services? By understanding the market demands, you can tailor your services to meet the needs of potential clients.

2. Leverage your expertise: Evaluate the skills and expertise of your team. Highlight the areas where your company has a competitive advantage and can deliver exceptional results. This can include specialized knowledge in a particular programming language, experience in handling complex network infrastructures, or expertise in implementing robust cybersecurity measures.

3. Determine your offerings: Define the specific services you will offer to clients. Will you provide end-to-end software development solutions, help clients set up and maintain their network infrastructure, or offer comprehensive cybersecurity audits and monitoring? Clearly articulate your offerings to ensure clients understand the full range of services you can provide.

• Consider offering a range of services to cater to different client needs.
• Stay updated with the latest technological advancements in the IT industry to expand your service offerings.
• Regularly assess the market demands and fine-tune your offerings to stay competitive.

4. Assess resource requirements: Identify the resources, such as skilled professionals, software tools, and infrastructure, you need to deliver your core services effectively. Ensure that you have the necessary resources in place or plan to acquire them before offering the services to clients.

5. Consider scalability: Plan your core services in a way that allows for scalability as your business grows. Assess if your offerings can be expanded or modified in the future to accommodate new client requirements.

By carefully determining your core services and offerings, you can position your IT outsourcing company to meet the specific needs of your target market. This strategic decision will be fundamental to attracting and retaining clients while establishing your company as a reliable and trusted partner in the IT industry.

Define Business Objectives And Goals

Defining clear and specific business objectives and goals is crucial for the success of an IT outsourcing company. These objectives will guide your company's actions and help you stay focused on achieving your desired outcomes. Here are some important steps to consider when defining your business objectives and goals:

• Identify your long-term vision: Start by envisioning where you want your company to be in the future. This could be in terms of revenue, market presence, client satisfaction, or any other relevant aspect. Your long-term vision will serve as a guidepost for setting your objectives.
• Set SMART objectives: Make sure your objectives are Specific, Measurable, Achievable, Relevant, and Time-bound . For example, instead of setting a general objective like 'increase revenue,' make it more specific like 'increase annual revenue by 10% within the next fiscal year.'
• Align objectives with core services: Your objectives should be closely aligned with the core services and offerings of your IT outsourcing company. Think about how achieving these objectives will directly impact your ability to deliver exceptional services to your clients.
• Prioritize objectives: It's important to prioritize your objectives based on their importance and feasibility. Consider which objectives are critical for the growth and sustainability of your business and focus your efforts on those first.
• Establish key performance indicators (KPIs): KPIs are measurable metrics that will help you track your progress towards your objectives. Identify the KPIs that are most relevant to your objectives and regularly monitor and analyze the data to ensure you are on track.

Tips for Setting Effective Objectives:

• Involve key stakeholders, including management and employees, in the objective-setting process to ensure buy-in and commitment.
• Make sure your objectives are challenging but realistic. Setting unrealistic goals can lead to frustration and demotivation.
• Regularly review and reassess your objectives to ensure they remain aligned with the evolving needs and goals of your IT outsourcing company.
• Communicate your objectives clearly and consistently to all stakeholders, both internal and external, to foster a sense of shared purpose and accountability.

Defining your business objectives and goals is a critical step in developing a comprehensive business plan for your IT outsourcing company. It will provide a clear direction for your company and serve as a roadmap towards success.

Develop A Pricing Strategy

Developing a pricing strategy is a crucial step in creating a successful business plan for an IT outsourcing company. It involves determining how much to charge for your services and finding the right balance between profitability and competitiveness. Here are some important considerations:

• Understand your costs: Before setting your prices, it is essential to have a clear understanding of your costs, including labor, overhead, equipment, and any other expenses related to providing your services. This will help ensure that your pricing is aligned with your business's profitability goals.
• Research the market: It is essential to research the market to determine the typical pricing structure for IT outsourcing services. This will help you understand the industry trends and ensure that your prices are competitive.
• Differentiate your pricing: Consider offering different pricing options to cater to various customer needs. This could include offering tiered pricing based on service levels or providing bundled packages that offer additional value to customers.
• Consider value-based pricing: Instead of solely focusing on your costs, consider incorporating the value your services bring to clients into your pricing strategy. This approach takes into account the benefits and outcomes your clients can expect from working with your company.
• Be transparent: Clearly communicate your pricing structure to clients, including any potential additional costs or fees. Transparency builds trust and helps clients make informed decisions about partnering with your IT outsourcing company.
• Regularly review and evaluate your pricing strategy to ensure it remains competitive and profitable.
• Consider offering discounts or promotions for new clients or long-term contracts to attract and retain business.

Create A Marketing And Advertising Plan

Once you have determined your target market and analyzed your competitors, it is essential to create a comprehensive marketing and advertising plan to promote your IT outsourcing company and attract potential clients. A well-designed plan will help you maximize your reach, build brand awareness, and generate leads. Here are some important steps to follow:

• Identify your unique selling proposition (USP) and key differentiators: Determine what sets your IT outsourcing company apart from the competition. Highlight your strengths, expertise, and innovative solutions that will appeal to your target market.
• Define your target audience: Identify the specific industries, businesses, or organizations that are most likely to require your services. Understand their needs, pain points, and preferences to tailor your marketing efforts accordingly.
• Choose the right marketing channels: Select a mix of online and offline marketing channels that will effectively reach your target audience. Consider leveraging digital platforms such as search engine optimization (SEO), social media marketing, email marketing, and content marketing. Explore offline options like industry events, trade shows, and direct mail campaigns.
• Create a strong brand identity: Develop a compelling brand logo, tagline, and consistent visual elements that reflect your company's values and resonate with your target market. This consistency will reinforce your brand messaging and enhance brand recognition across all marketing and advertising materials.
• Design a content marketing strategy: Proactively share valuable and relevant content through blog posts, whitepapers, case studies, and ebooks. Position yourself as an industry expert and build trust with your audience. Use SEO techniques to optimize your content and improve your website's visibility in search engine results.
• Implement lead generation tactics: Use lead magnets such as free consultations, webinars, or downloadable resources to capture potential clients' contact information. Connect with them through targeted email campaigns to nurture relationships and convert leads into paying customers.
• Monitor and analyze your marketing efforts: Regularly track the performance of your marketing and advertising activities. Utilize key performance indicators (KPIs) such as website traffic, conversion rates, and social media engagement to assess the effectiveness of your strategies. Make data-driven adjustments to optimize your marketing plan continuously.

Tips for Creating an Effective Marketing and Advertising Plan:

• Stay updated with the latest industry trends and technological advancements to ensure your marketing strategies align with the evolving needs of your target market.
• Build strong partnerships and collaborations with complementary businesses or influencers in the IT industry to expand your reach and gain credibility.
• Regularly review and update your marketing plan to incorporate new ideas and tactics based on feedback and market dynamics. Flexibility is key in an ever-changing business environment.

Establish A Legal Structure

Establishing a legal structure for your IT outsourcing company is crucial for protecting your business and ensuring compliance with applicable laws and regulations. Here are some important steps to take when establishing a legal structure:

• Choose the right business entity: Consult with a legal professional to determine the most suitable legal structure for your company. Common options include sole proprietorship, partnership, limited liability company (LLC), or corporation. Consider factors such as liability protection, taxation, and ease of management before making a decision.
• Register your business: Once you have chosen a legal structure, you will need to register your IT outsourcing company with the appropriate government authorities. This typically involves filling out the necessary paperwork and paying any required fees. Be sure to research and comply with all registration requirements specific to your jurisdiction.
• Obtain necessary licenses and permits: Depending on your location and the nature of your business, you may need to obtain certain licenses and permits to operate legally. Conduct thorough research to identify the specific licenses and permits required for your IT outsourcing company and ensure timely compliance.
• Protect your intellectual property: As an IT outsourcing company, your intellectual property may be a valuable asset. Take steps to protect your proprietary software, designs, and other intellectual property through the use of trademarks, copyrights, and patents. Consult with an intellectual property attorney to understand the best strategies for safeguarding your company's assets.
• Establish contracts and legal agreements: Working with clients and vendors requires clear and enforceable contracts. Draft comprehensive agreements that outline the terms and conditions of your services, project timelines, payment terms, and any other relevant provisions. It is advisable to seek legal advice when creating these contracts to ensure they protect your interests.
• Consult with a qualified attorney or legal professional who specializes in business law to help you navigate the legal aspects of establishing your IT outsourcing company.
• Keep thorough records of all legal documents, contracts, licenses, permits, and registrations.
• Regularly revisit and update your legal structure as your business grows and evolves.

By establishing a solid legal structure for your IT outsourcing company, you can minimize legal risks, protect your business interests, and operate with confidence in the competitive market.

Create A Financial Plan And Project Budgets

Creating a financial plan and project budgets is a vital step in the process of starting an IT outsourcing company. It allows you to have a clear understanding of the financial aspects of your business, helps you set realistic goals, and ensures that you have a roadmap for managing your finances effectively.

When creating a financial plan, it is important to consider various elements such as startup costs, operational expenses, revenue projections, and cash flow management. Here are some key considerations:

• Startup Costs: Identify the initial costs involved in setting up your IT outsourcing company. This may include office space, equipment, licenses, software, and any other necessary infrastructure. It is crucial to accurately estimate these costs to avoid any financial surprises in the early stages.
• Operational Expenses: Analyze and project the ongoing operational expenses that your company will incur. This may include personnel salaries, rent, utilities, insurance, marketing expenses, and other overhead costs. It is essential to have a detailed understanding of these expenses to determine your breakeven point and profitability.
• Revenue Projections: Forecasting your company's revenue is essential for financial planning. Consider factors such as the target market size, competitive landscape, pricing strategy, and sales projections. It is crucial to be realistic and conservative in estimating your revenue potential.
• Cash Flow Management: Effective cash flow management is crucial for the sustainability of your business. Create a cash flow statement that outlines your projected inflows and outflows of cash on a monthly or quarterly basis. This will help you identify potential cash shortages and take necessary measures to mitigate them.
• Consult with a financial advisor or accountant to ensure accuracy and reliability of your financial projections.
• Research and understand the tax obligations and regulations specific to the IT outsourcing industry.
• Regularly review and update your financial plan as your business grows and evolves.

By creating a comprehensive financial plan and project budgets, you will be better equipped to make informed decisions, secure funding if needed, and navigate the financial challenges that may arise in the competitive IT outsourcing industry.

In conclusion, writing a business plan for an IT outsourcing company requires careful consideration and planning. By following these 9 steps, you can create a comprehensive plan that will guide your company's success. Conduct market research to understand your target market and analyze competitors. Determine your core services and offerings, and define your business objectives and goals. Develop a pricing strategy and create a marketing and advertising plan to reach your target audience. Establish a legal structure and create a financial plan to project budgets and ensure financial stability.

By following these steps, you can create a solid foundation for your IT outsourcing company and increase your chances of success in the competitive market.

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How To Build An Outsourcing Strategy In 5 Steps + Examples

Businesses are in a never-ending race, trying to stay ahead of the competition, catch the latest market trends, and keep the cash flowing – all happening at once. While you strive to keep up with the business’s growing demands, there are a truckload of challenges staring you in the face. You have a great team but you also need the collective power of specialized talents from around the globe. This is where a great outsourcing strategy comes in handy.

Outsourcing is promising but it can actually get pretty tricky. Making sure you get the results you're aiming for while working with outsourcing companies depends on really knowing what's possible and what's not. You need to have a clear understanding of what tasks still belong to you and which ones you should delegate to them.

If you are new to this concept and looking to get your hands on it, our article is just what you need. Here, we will help you sculpt a great outsourcing strategy that is a sure-shot route to boost your company’s productivity and raise that ROI graph. Global talent awaits you. 

What Is An Outsourcing Strategy: A Quick Refresher

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An outsourcing strategy is a detailed plan to get some of your work done through partnering with external individuals or companies . Instead of doing everything in-house, you decide what business processes could be done more efficiently by others who specialize in those areas. These tasks might not be your expertise but are crucial for your business.

Imagine you are running a startup and have many things on your plate – from product development to marketing, customer service to financial management. It's a whirlwind of tasks and you're just one person. Here’s when you need to turn to strong outsourcing strategies !

A strategic outsourcing strategy is all about flexibility. It's not an all-or-nothing deal. You can outsource specific tasks or entire functions , depending on what makes sense for your business. 

When you outsource, you tap into expertise that might not be available in-house which gives you a competitive advantage over others. It is cost-effective too. Instead of hiring full-time employees for every role, you pay for the services you need when you need them.

5 Steps For Creating A Successful Outsourcing Strategy

We prepared a comprehensive guide that is a one-stop shop for all things outsourcing. It condenses all the important steps into a neat package and everything you need is right in there. So let’s take a detailed look at it.

Step 1: Define Your Goals & Needs

Before you start, get your ducks in a row. By ducks, we mean your business goals, needs, and even a few limitations. This step will set the coordinates for your outsourcing process and a whole lot of your success depends on how well you execute this one.

1.1. Assess Internal Capabilities & Limitations

Take a good, honest look at your in-house capabilities . What are you really good at? What could use a little boost? Maybe you've got an excellent marketing team but struggle to keep up with customer service operations. Identifying these strengths and weaknesses will help you target the right processes for outsourcing.

1.2. Assess Current Business Operations & Challenges

Now it's time for a bit of self-reflection. What are the pain points in your current business operations? Is there a specific process that seems to slow everything down? Pinpoint these bottlenecks – they're prime candidates for outsourcing.

Get down to the brass tacks. Take that list of operational pain points and start breaking them into smaller tasks or processes . Think about what tasks could be handled just as well or even better by an external outsourcing services provider. It could be data entry, payroll, IT support – you name it.

1.3. Set Clear Goals & Expectations

Outsourcing for the sake of outsourcing? That's not what we're aiming for. Set clear, measurable goals . Do you want to reduce response time in customer support by 30%? Cut down on software development costs by 20%? These goals give your outsourcing strategy direction and meaning .

1.4. Set Budget

Figure out how much you're willing to invest in this outsourcing venture. You don't want to be in over your head but you also want to have enough to make a meaningful impact . So tally up those dollars and cents and make sure you're not breaking the bank.

1.5. Create A Detailed Outsourcing Plan

Create a detailed outsourcing plan that provides instructions for your business strategy and operations . This plan spells out everything from A to Z. Clearly define the scope of the tasks you're outsourcing. Are you handing over just a slice of the pie or the whole thing? 

Outline the deliverables – what's the quality and quantity you're expecting? Set a realistic timeline – business process outsourcing isn't magic; it takes time to set up and get the gears turning. This document will not only prove handy for your current needs but also provide a roadmap for future outsourcing contracts.

Step 2: Choose The Right Outsourcing Model

Having the right outsourcing model can directly impact your operations, efficiency, and ultimately, your profits. Different models offer different benefits . All you have to do is to dig a bit deeper into each model and then match them with the goals you set in the first step.

Let’s make it easy for you. We’ll discuss 3 major outsourcing models to give you a clear picture of what each has to offer and figure out the perfect match.

2.1. Onshore Outsourcing

Imagine you're sitting in your office, sipping on your favorite coffee blend and discussing business strategies with a team that's located, well, across the town. That's onshore outsourcing for you. This approach involves partnering with outsourcing companies within your own country . No time zone issues, no language barriers, and you're still benefiting from external expertise.

When To Consider Onshore

• If the nature of your business requires compliance with strict regulations that are specific to your country.
• If communication barriers are a major concern and you prefer a shared language and cultural understanding.
• If you want to keep a close eye on your outsourced team and collaborate in real-time without worrying about time differences.

2.2. Offshore Outsourcing

Offshore outsourcing is partnering with a service provider in a different country, often one with a lower cost of living . This can save you big while still accessing the best talent . Think of it as expanding your team's reach to a global scale. Yes, you might have to deal with time zone challenges and perhaps some language nuances but the potential benefits can be substantial.

When To Consider Offshore

• If your business operates in multiple time zones and requires round-the-clock productivity.
• If you're in a market where specific skills are scarce locally but you can find qualified professionals elsewhere.
• If you're looking to cut costs while maintaining quality as labor expenses will be lower in the outsourcing destination.

2.3. Nearshore Outsourcing

Now let's find the middle ground. Nearshore outsourcing is when you collaborate with a service provider in a neighboring or nearby country. This gives you a balance between proximity and cost-effectiveness . While there might still be some time zone differences and potentially slight language variations, they are usually easier to manage compared to offshore outsourcing.

When To Consider Nearshore

• If you want to explore new markets or extend your business reach to adjacent regions.
• If you're looking to hire talent that has similar skill sets and cultural understanding because of geographic proximity.
• If you want a balance between cost savings and close collaboration without the extreme time zone differences of offshore outsourcing.

Step 3: Select The Right Outsourcing Partner

Selecting the right outsourcing partner is about more than just checking boxes. It's about finding someone who complements your internal business processes , understands your company culture, and can help you optimize those processes. 

Here’s how you can make sure that you're picking a partner that's a good fit for the long run.

3.1. Researching Potential Outsourcing Providers

Start by looking into different outsourcing firms or third-party companies that specialize in the services you're looking to outsource. Check out the online platforms, industry forums, and directories. Google is your gateway but Catena, Upwork, and Freelancer are the ones that you should consider first.

The power of word-of-mouth is unmatched. Reach out to your professional network – colleagues, mentors, peers – and ask for recommendations. This initial phase is all about casting a wide net. The larger your candidate pool, the more informed your decision will be later on.

3.2. Evaluating Expertise, Experience, & References

Now that you have a list of potential partners, it's time to dig deeper. Look into their expertise and experience . Have they been in the business long enough to understand the ins and outs of the processes you're looking to outsource? Check out their track record – successful projects, satisfied clients, and maybe even awards or recognition in their field.

References are golden. Reach out to companies who've worked with your potential outsourcing partners before . Ask them about their experiences – the good, the bad, and the surprising. It will tell you what you are signing up for.

3.3. Ensuring Cultural Compatibility & Communication Capabilities

Remember, you're not just outsourcing tasks – you're partnering with another company. This means your cultures need to gel well. Look into the values, work ethics, and business practices of the potential outsourcing company . If your company is all about innovation and quick decision-making, partnering with an overly bureaucratic firm will be a mismatch.

Make sure the potential outsourcing provider can communicate effectively and clearly. You don't want misunderstandings and miscommunications causing hiccups in your projects. Don't be afraid to test their communication skills during your interactions – it's a litmus test for how well you'll work together when the real projects start.

Step 4: Implement & Manage The Outsourcing Strategy

This step is where your well-thought-out plan starts taking shape in the real world. It's about blending the outsourcing company smoothly into your existing ecosystem. Let's break it down into 3 important sub-steps:

4.1. Ensure Knowledge Transfer & Training

Identify what knowledge is critical for them. This could range from understanding your company's culture and values to specific project-related details.

Create detailed training materials, conduct workshops, or even arrange shadowing sessions where your in-house experts work side by side with the outsourced team . Encourage an interactive learning environment where questions are welcomed and clarifications are made.

4.2. Set Up Necessary Infrastructure & Tools

Identify the tools and software your outsourced team will need. This could be:

• Data-sharing tools like Google Drive and Dropbox
• Project management software like Trello , Asana , or Jira
• Communication platforms like Slack and Microsoft Teams

Keep these tools and software updated to ensure they stay effective and secure. Regularly assess whether they're meeting the needs of both your in-house and outsourced teams.

Consider data security too – establish access controls to protect sensitive information while ensuring that the outsourced team can collaborate effectively.

4.3. Ensure Alignment Between In-House Teams & Outsourced Partners

Set up regular meetings to discuss progress, challenges, and goals. Create channels for instant communication – whether it's email, messaging apps, or video conferencing platforms. Define roles and responsibilities clearly to avoid confusion.

Alignment isn't just about task coordination; it's about shared objectives and understanding. Help both your in-house and outsourced teams see the bigger picture and how their efforts contribute to the overall success of the company.

Step 5: Monitor, Evaluate, & Optimize

This step is where we roll up our sleeves and make sure that our outsourcing efforts are not only paying off but also continuously improving. Let’s discuss how you can achieve this. 

5.1. Establish Performance Metrics & KPIs

To truly gauge the effectiveness of your outsourcing strategy, you need to have performance metrics and KPIs in place that tell you how well things are going. For instance, if you outsource your customer support, your KPIs should include response time, customer satisfaction ratings, and resolution rates. 

If it's about software development, you should track project completion time, bug fix rates, and code quality. The idea is to align these metrics with your initial objectives so that you have a clear picture of whether you're getting the outcomes you wanted.

5.2. Regularly Trace & Assess Outcomes

It's not a "set it and forget it" deal. You should regularly track and assess how things are unfolding. This could be as simple as weekly or monthly reviews , depending on the nature of your outsourcing engagement. When you compare actual performance against your established metrics and KPIs, you can identify trends, spot any deviations, and understand whether you're meeting your goals.

These assessments are also a chance to have open communication with your outsourcing partner . Discuss what's working well, areas that need improvement, and any changes in your business environment that might impact the outsourcing arrangement.

5.3. Address Any Issues Or Deviations Promptly

In the world of outsourcing, as in life, things might not always go as planned and that's okay. The key here is to tackle issues head-on and as soon as they arise . If you notice a dip in performance or a deviation from the agreed-upon standards, don't wait around hoping it will magically improve.

‍ Reach out to your outsourcing partner , share your concerns, and work together to find solutions. The sooner you address these issues, the smoother your outsourcing journey will be. Remember, it's a partnership and both sides should be invested in making it work.

5.4. Continuously Optimize The Outsourcing Strategy

Your outsourcing strategy isn't etched in stone. It's a dynamic process that should evolve based on your experiences and changing business landscape. Analyze the data and insights you have collected to identify areas where you can do even better.

This could mean tweaking your processes, adjusting your KPIs, exploring new technologies, or even rethinking the scope of your outsourcing. The idea is to never settle for "good enough." Strive for excellence and be open to innovation and adaptation.

11 Examples Of Having The Right Outsourcing Strategy In Place

Let's discuss 11 examples that show how having the right outsourcing strategy can help companies optimize business processes.

I. IT Services

Imagine a startup that needs to maintain its complex IT infrastructure. Instead of hiring a full in-house IT team, they outsource their IT services to a specialized firm . This way, they can tap into the expertise of professionals who specialize in IT maintenance while also reducing the costs associated with hiring and training large IT staff.

II. Customer Support

Many large corporations outsource their customer support to call centers in different countries. This not only reduces labor costs but also provides 24/7 customer service coverage because of time zone differences. This gives them a dedicated team available to address customer queries and concerns around the clock.

III. Manufacturing

Think about a fashion brand that designs clothing but doesn't own its own production facilities. Instead, they outsource the manufacturing process to third-party factories. This lets the brand focus on design and marketing while the manufacturing experts handle the actual production efficiently.

IV. Content Creation

Let's say a marketing agency needs a constant stream of blog posts and social media content. Instead of hiring multiple full-time writers, they outsource content creation to freelance writers or specialized content virtual assistants. This way, they get diverse perspectives and a steady flow of content without the overhead of hiring additional staff.

V. Payroll Processing

Consider a medium-sized business with a complex payroll structure. Rather than handling complex tax regulations themselves, they can hire a virtual assistant. This guarantees timely and accurate payments to employees without getting entangled in payroll calculations.

VI. Data Entry & Management

Picture a company dealing with heaps of customer data that needs organization. They can outsource data entry and management tasks. A data entry virtual assistant can ensure that information is organized and easily accessible without overloading the in-house team.

VII. Research & Development

Even big corporations sometimes outsource parts of their research and development projects. Let's say a pharmaceutical company wants to explore a new drug molecule. They collaborate with external research institutions to leverage their expertise in a specific area while sharing the risks and costs of development.

VIII. Human Resources (HR)

Many companies, especially small businesses, outsource their HR functions. This includes tasks like recruitment, payroll processing, and employee benefits management. It's like having an HR department on call, minus the HR department setup costs.

IX. Bookkeeping & Accounting

Think about a small business owner who isn't exactly a numbers guru. They can outsource their bookkeeping and accounting tasks to professionals. This way, they're not stuck deciphering spreadsheets and they ensure their financial records are accurate and tax-compliant.

X. Market Research

A marketing team is launching a new product. Rather than diverting their energy into extensive market research, they can hire a research virtual assistant. This way, they get valuable insights into consumer preferences and trends without taking focus away from product development.

XI. Administrative Tasks

Let's consider a founder of a Fintech startup. This founder has an incredibly demanding schedule. To share some of his workload, the founder decides to outsource tasks to an executive assistant . The assistant takes charge of the CEO's calendar , scheduling meetings, conferences, and appointments in a way that maximizes efficiency and minimizes conflicts.

Why You Should Make Catena A Part Of Your Outsourcing Strategy?

At Catena , we understand that startups are all about juggling a thousand things at once – from refining your product to managing your team and keeping the ship sailing smoothly. Our executive assistants know this all too well and are trained to take charge from the word go. 

When we say we hire the top 1% of talent, we really mean it. Our rigorous selection process ensures that only the most skilled and dedicated EAs join our team. With over 100 CEOs served , our executive assistants have handled the chaos of board meetings and event planning and mastered the art of keeping CEOs on top of their game . 

Our executive assistants are from the Philippines so they naturally possess strong work ethics and excellent English language skills. Hiring an executive assistant through Catena isn't just about saving dollars; it's about smart spending. You get expert assistance at a fraction of the cost of hiring an in-house resource. How? We tap into the brilliance of university graduates who bring their A-game without breaking the bank.

A great outsourcing strategy gives you a way out of ineffective sticky situations by cutting costs, increasing efficiency, and accomplishing specialized tasks. But there are certain preliminaries you should follow – internal readiness assessments to ensure that it will benefit your organization in many ways. 

That's where we come in. At Catena, we understand that outsourcing isn't just a buzzword; it's a strategic move that needs careful planning. Our team specializes in finding the perfect executive assistants who can seamlessly join your efforts and supercharge your operations.

Ready to dive in? Let's have a chat and figure out how Catena's executive assistants can be the magic ingredient that takes your outsourcing strategy to the next level. Book a consultation today and explore the possibilities.

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What Is Outsourcing?

Understanding outsourcing, special considerations.

• Outsourcing FAQs

The Bottom Line

• Business Essentials

Outsourcing: How It Works in Business, With Examples

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house by the company's own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure. As such, it can affect a wide range of jobs, ranging from customer support to manufacturing to the back office.

Outsourcing was first recognized as a business strategy in 1989 and became an integral part of business economics throughout the 1990s. The practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of  free-market economies on a global scale.

Key Takeaways

• Companies use outsourcing to cut labor costs, including salaries for their personnel, overhead, equipment, and technology.
• Outsourcing is also used by companies to dial down and focus on the core aspects of the business, spinning off the less critical operations to outside organizations.
• On the downside , communication between the company and outside providers can be hard, and security threats can amp up when multiple parties can access sensitive data.
• Some companies will outsource as a way to move things around on the balance sheet.
• Outsourcing employees, such as with 1099 contract workers, can benefit the company when it comes to paying taxes.

Investopedia / Mira Norian

Outsourcing can help businesses reduce labor costs significantly. When a company uses outsourcing, it enlists the help of outside organizations not affiliated with the company to complete certain tasks. The outside organizations typically set up different compensation structures with their employees than the outsourcing company, enabling them to complete the work for less money. This ultimately enables the company that chose to outsource to lower its labor costs.

Businesses can also avoid expenses associated with overhead , equipment, and technology.

In addition to cost savings, companies can employ an outsourcing strategy to better focus on the core aspects of the business. Outsourcing non-core activities can improve efficiency and productivity because another entity performs these smaller tasks better than the firm itself. This strategy may also lead to faster turnaround times, increased competitiveness within an industry, and the cutting of overall operational costs.

Companies use outsourcing to cut labor costs and business expenses, but also to enable them to focus on the core aspects of the business.

Examples of Outsourcing

Outsourcing's biggest advantages are time and cost savings. A manufacturer of personal computers might buy internal components for its machines from other companies to save on production costs . A law firm might store and back up its files using a cloud-computing service provider, thus giving it access to digital technology without investing large amounts of money to actually own the technology.

A small company may decide to outsource bookkeeping duties to an accounting firm, as doing so may be cheaper than retaining an in-house accountant. Other companies find outsourcing the functions of human resource departments, such as payroll and health insurance, as beneficial. When used properly, outsourcing is an effective strategy to reduce expenses, and can even provide a business with a competitive advantage over rivals.

Criticism of Outsourcing

Outsourcing does have disadvantages. Signing contracts with other companies may take time and extra effort from a firm's legal team. Security threats occur if another party has access to a company's confidential information and then that party suffers a data breach. A lack of communication between the company and the outsourced provider may occur, which could delay the completion of projects.

Outsourcing internationally can help companies benefit from the differences in labor and production costs among countries. Price dispersion in another country may entice a business to relocate some or all of its operations to the cheaper country in order to increase profitability and stay competitive within an industry. Many large corporations have eliminated their entire in-house customer service call centers, outsourcing that function to third-party outfits located in lower-cost locations.

First seen as a formal business strategy in 1989, outsourcing is the process of hiring third parties to conduct services that were typically performed by the company. Often, outsourcing is used so that a company can focus on its core operations. It is also used to cut costs on labor, among others. While privacy has been a recent area of controversy for outsourcing contractors, it has also drawn criticism for its impact on the labor market in domestic economies.

What Is an Example of Outsourcing?

Consider a bank that outsources its customer service operations. Here, all customer-facing inquiries or complaints with concern to its online banking service would be handled by a third party. While choosing to outsource some business operations is often a complex decision, the bank determined that it would prove to be the most effective allocation of capital, given both consumer demand, the specialty of the third-party, and cost-saving attributes. 

What Are the Disadvantages of Outsourcing?

The disadvantages of outsourcing include communication difficulties, security threats where sensitive data is increasingly at stake, and additional legal duties. On a broader level, outsourcing may have the potential to disrupt a labor force. One example that often comes to mind is the manufacturing industry in America, where now a large extent of production has moved internationally. In turn, higher-skilled manufacturing jobs, such as robotics or precision machines, have emerged at a greater scale.

While outsourcing can be advantageous to an organization that values time over money, some downsides can materialize if the organization needs to retain control. Outsourcing manufacturing of a simple item like clothing will carry much less risk than outsourcing something complex like rocket fuel or financial modeling. Businesses looking to outsource need to adequately compare the benefits and risks before moving forward.

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6 Steps for Building a Successful Outsourcing Strategy

• April 15, 2023
• In Business , Talent , Staffing & Hiring

Software development firms and business IT departments increasingly rely on technical staffing services to help run their businesses to offset mounting costs, or pull in outside engineering talent. Small to midsize US-based businesses are especially well positioned in terms of their market position to take advantage of the benefits that come from outsourcing. By understanding how to implement different outsourcing models when required, companies can rein in their HR budgets, while gaining access to skilled technical labor when that labor is needed most (e.g. on a tight deadline, or to fill in-house skills gaps).

BXGI believes that in order to get the most for our clients, it’s essential a firm knows how to build a successful outsourcing strategy. By laying out a detailed blueprint of how to approach outsourcing ahead of time, a company can ensure that it’s day-to-day work schedule continues to run as smoothly as possible as augmented staff integrate with internal creative or development teams. Over the years, BXGI has worked with a variety of clients, and discovered that when a business adopts a comprehensive outsourcing approach from the onset, vendors can better manage and maintain exceptionally high service quality, while keeping clients’ expenditures as low as possible.

Here are 6 crucial steps to building an effective outsourcing strategy:

1. Outline Detailed Outsourcing Goals

A company that clearly defines its outsourcing goals early on is already one step ahead of the competition. Firms that carefully outline their outsourcing objectives, step-by-step, will be in a better position to select the right staff augmentation model for their particular industry than companies that pay less attention to these steps, because they’ve taken the time to understand the pros and cons of outsourcing.

Another advantage of defining crystal clear outsourcing goals is the opportunity to take stock of a company’s actual outsourcing needs. While staff augmentation comes with many positives, there are some downsides as well, which could mean outsourcing might not be the best staffing approach for a particular business during a certain period of time. But when a gaming or software development firm is preparing for a next phase in product development, or launching several new projects that exceed the ability of their current employees to handle, or require outside technical or creative expertise, staff augmentation agencies can help provide a company with the skilled professionals it needs.

By establishing well-defined outsourcing goals early on, a firm can utilize IT staffing in the most effectual manner possible — hopefully increasing productivity, while saving money at the same time, by scaling up or scaling down supplemental staff as business or budgetary concerns dictate.

2. Budget for the Expected and Unexpected

According to Statista, which specializes in market and consumer data, information technology outsourcing (ITO) hit $62 billion in 2018 (business process outsourcing, or BPO, reached almost $24 billion). And while the size of the IT outsourcing market will likely fluctuate over the next few years due to changes in the global economy, as well as due to companies cutting costs by moving less critical IT services over to cloud computing environments , operational managers still need to budget for different business scenarios that come from working with a staff augmentation model.

When mapping out monthly, quarterly and annual budgets, companies need to take into account their present staff augmentation needs, while factoring in how augmentation can help reduce their overall personnel budgets, if and when properly implemented. But they’ll also need to budget for the unexpected, such as unforeseen employee turnover, or a new contract that requires more skilled labor than is currently on staff.

Managers often cite “hidden costs” as one of the primary reasons why outsourcing endeavors can fall short of initial expectations. A reputable IT staffing firm can help a company validate its supplemental staffing plan, finding the right balance between affordability and expected results, while also identifying possible hidden costs, giving the client the ability to quickly increase or decrease supplemental staff when needed, or on short notice, without breaking the bank.

3. Choose the Right Outsourcing Engagement Model

When building a compressive outsourcing strategy, HR executives should prioritize the specialized skills they’re searching for, and why. By clearly defining the technical or creative expertise they need to add, it becomes easier for managerial teams to choose an outsourcing engagement model that matches their specific staffing requirements.

There are a variety of outsourcing models to choose from, including onsite, onshore, nearshore and offshore engagement models, all of which come with different benefits and risks. A company looking to offload noncritical technical operations would likely be interested in a different type of outsourcing model than a software firm on the hunt for an exceptionally rare programing skill, which would differ still from the model a gaming studio would select to fill a few in-house skills gaps on a short-term basis. By choosing the right outsourcing engagement model — in consultation with an experienced technical staffing firm — from the beginning, businesses can put supplemental staff to work as quickly and efficiently as possible, without wasting time or resources, or cutting down on productivity for any significant amount of time.

4. Mitigate Outsourcing Risks

While outsourcing comes with many benefits, it also carries with it some risks that need to be addressed (as we’ve already briefly covered). By understanding and mitigating these risks, companies can reduce their financial exposure, while increasing the efficiency of the outsourcing model they select. Here are four risks to pay particularly close attention to:

• Trust and Control: Managerial oversight is reduced when a company outsources, especially when choosing the onshore, nearshore or offshore models. HR directors can build trust by learning as much as they can about the IT staffing firm they’re working with, speaking with previous clients, and making sure they’re comfortable with their vendor’s outsourcing methodologies. These simple steps can help establish clear communications protocols, fostering a sense of cooperation and trust between a company and its vendor.
• Hidden Costs: As we’ve discussed, hidden costs, when it comes to outsourcing, can quickly lead to client dissatisfaction. When signing a contract with an IT staff augmentation agency, HR executives need to make sure their contracts clearly outline terms of payment, any lists of possible (and acceptable) supplementary charges, what services might incur additional charges, a ceiling to additional expenses, as well as a procedure for reviewing surcharges if and when those services/charges are actually needed.
• Quality Issues: In addition to a reduction or loss of operational control or oversight, outsourcing can also carry the risks of quality issues. These risks can be mitigated by working with vendors that have demonstrated a commitment to quality control with past clients and projects, and have a comprehensive process in place to quickly resolve any quality issues — onsite or offsite — with a creative or development project (employing augmented staff) should product or service quality issues arise.
• Confidentiality and Intellectual Property Rights: BXGI believes intellectual property is a serious matter. Rather than create any uncertainty over intellectual property issues (like copyrights, patents, or trade secrets) HR and legal executives might have concerning supplementary staff, BXGI safeguards against these issues by having all of our creative and technical talent sign exclusive work ownership agreements and NDAs. These contracts take our clients’ confidentiality concerns into account, while also protecting their intellectual property rights.

5. Actively Track Outsourcing Progress and Added Value

In order to monitor the advantages and disadvantages that come with outsourcing, it’s important a company or development team has some clear key performance indicators (KPIs) in place. These indicators can help executives decide if the particular staff augmentation model they’ve chosen is the right one for them. And while these performance indicators can vary widely, a reputable outsourcing vendor should be able to offer multiple indicators (assuming the client has already established clear outsourcing objectives), including, but not limited to: benchmark procedures for breaking down outsourcing costs versus supplemental staff job performance, measuring outsourcing expenditures against productivity, measuring the output and efficiency of different augmented teams against expected outcomes outlined in a service-level agreement (SLA) — and of course setting up the specific internal protocols designed to measure and report KPIs in the first place.

By measuring the benefits and progress (or lack of progress) of the outsourcing engagement model a company selects, corrective steps can be implemented if staffing expectations aren't being met. But if those predefined expectations are being met, actively tracking outsourcing benefits and progress can help strengthen the model being employed, thus contributing to continued outsourcing success.

6. Establish Strong Client/Vendor Communication Channels and Relationships

One of the most straightforward and obvious steps to outsourcing success is finding a technical staffing firm that can mesh with a client’s way of doing business. Corporate culture and communication protocols can vary extensively in the business world. Companies looking to hire augmented staff locally or remotely all want to work with technical staffing agencies that operate in a transparent, responsive manner, and that will address any outsourcing issues that may occur promptly and professionally.

An outsourcing vendor that takes the time to learn about a client’s internal business culture, and how it runs its engineering and creative teams, will be building the foundation to a relationship that fosters good communication. This close relationship, in turn, helps IT staffing firms provide the most appropriate company-specific staffing solutions they can, while remaining flexible enough (thanks to constant client/vendor communication) to predict and adjust to a company’s personnel needs down the road.

Companies that lay out a well-defined blueprint in terms of what they expect from their outsourcing agency, and are aware of the advantages and occasional disadvantages that come with outsourcing and staff augmentation (especially in relation to their specific industries), will be in a better position to optimize the advantages, while reducing any associated risks. By building a careful, detailed approach to outsourcing from the beginning of a project, managers will be setting up a clear path to creating a sustainable and successful outsourcing strategy, which will ultimately help them better meet their business goals.

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Outsourcing Plan Template

What is an Outsourcing Plan?

An outsourcing plan is a strategic plan developed to identify and manage any external services, resources, and activities related to a business. It outlines the goals, objectives, and key performance indicators (KPIs) that need to be achieved in order to successfully outsource operations and activities. This plan also outlines the actions required to achieve the desired results and the cost savings associated with the plan.

What's included in this Outsourcing Plan template?

• 3 focus areas
• 6 objectives

Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.

Who is the Outsourcing Plan template for?

This Outsourcing Plan template is designed for teams of any size, from small startups to large corporations, and for any industry. This template is an easy-to-use guide to help you create a plan that identifies and manages your outsourcing activities.

1. Define clear examples of your focus areas

The first step in creating an outsourcing plan is to define the focus areas. A focus area is a broad area of business operations that you want to outsource. Examples of focus areas include identifying and evaluating outsourcing opportunities, managing and monitoring outsourcing contract performance, and monitoring and controlling outsourcing costs.

2. Think about the objectives that could fall under that focus area

Once the focus areas are identified, the next step is to think about the objectives that could fall under those focus areas. Objectives are specific goals that you want to achieve in order to reach the desired results or cost savings. Examples of objectives can include establishing clear criteria for outsourcing, analyzing cost savings, establishing performance metrics, and monitoring performance.

3. Set measurable targets (KPIs) to tackle the objective

Once the objectives are identified, the next step is to set measurable targets (KPIs) to tackle the objectives. Key performance indicators (KPIs) are measurable targets that you set to track the progress of your objectives. Examples of KPIs can include the number of criteria established, the cost savings per month, the number of performance metrics established, and the percentage of performance metrics met.

4. Implement related projects to achieve the KPIs

The fourth step in creating an outsourcing plan is to implement related projects to achieve the KPIs. Projects, or actions, are the specific activities that need to be completed in order to meet the objectives and KPIs. Examples of projects can include developing a list of criteria for evaluating potential outsourcing opportunities, analyzing potential cost savings of outsourcing, developing a set of metrics to measure the performance of the contract, and developing cost control mechanisms to ensure the contract is cost effective.

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

The Cascade Strategy Execution Platform is a powerful tool to help you manage, monitor, and control your outsourcing activities. It helps you track your progress and adjust your plan if needed in order to ensure you reach your goals and objectives. With Cascade, you can see faster results from your outsourcing strategy and make sure your business is running as efficiently as possible.

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Outsourced Computer Support Business Plan

Start your own outsourced computer support business plan

Austin Kinetic

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Austin Kinetic is an information technology consulting firm serving the Austin Metro area with top quality engineers who have a keen interest in customer satisfaction.  The time is right for consulting companies to flourish.  With the recent gains in the stock market, capital is again becoming available for IT infrastructure improvements.  Austin Kinetic will position itself to win a good deal of that emerging business.  The company has been incorporated in Nevada and has acquired an operating permit for Texas.  Austin Kinetic anticipates an enviable cumulative net profit by the end of year three.

The Market Austin is known as “little Silicon valley” due to its high percentage of technology companies.  With its relatively low cost of living and ample space for expansion, Austin promises to be a strong market into the foreseeable future. There are currently over 7,000 companies that fit the aim of Austin Kinetic in the Austin Metro area, with only four major competitors.  This combination provides a rich opportunity, bolstered by the current up-turn in the area and national economy.

The Business Model Austin Kinetic will leverage the industry knowledge of its founding members to provide outstanding service to its customers.  The company will initially have as little overhead as possible with its founders working out of their own homes, using their own transportation means to reach clients.  The company will be developed with a “customer service and satisfaction first” mentality in an effort to build acceptance and a positive reputation in the local industry.

The Management Team In order for the company to be successful, Austin Kinetic must fully leverage the experience and insight of its management team, which includes Adam Authortisement, Bob Borgware, Cary Curry, Dean Dri, and Edgar Extension. The team has over forty-eight cumulative years of experience in service operations management and information technology support.  They currently hold multiple technology industry vendor certifications crossing several disciplines including both logical and physical network structure and management. Over the course of their careers, the team has served in various technical roles with Fortune 500 companies and has been successful in both large and small environments.

1.1 Objectives

Austin Kinetic’s objectives for the first five years:

• Establish and maintain at least twenty-four full time service contract customers.
• Establish an office in Austin, TX.
• Break the Big M revenue mark.

1.2 Mission

Austin Kinetic is an innovative business technology company that was founded on the belief that one company can make more than a difference, it can change the whole face of business as we know it.

1.3 Keys to Success

• Depth of knowledge.
• Breadth of ability.
• Development of a strong business relationship with customers to gain an understanding of their business and business needs.
• Ability to network in the industry.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Austin Kinetic is incorporated in Nevada with an operating office in Austin, Texas. Initial staff will consist of a small group of experienced computer engineers who’s skills and experience collectively cover a very broad segment of the open systems’ distributed client/server field. The company’s initial focus will be installation and configuration projects which will be developed into ongoing support contracts.

2.1 Company Ownership

Austin Kinetic is incorporated. The major share holders are Adam Authortisement, Bob Borgware, Cary Curry, Dean Dri, and Edgar Extension.

2.2 Start-up Summary

The start-up costs for the company are detailed in the table below, and will be funded by the founder’s personal funds. There will be only small initial equipment cost as the company will be greatly dependent upon its founders’ resources. It is expected that each employee will initially cover the cost of transportation, cell phone, and incidentals that arise in the course of due business. The company will begin covering those costs as revenue streams are generated. Specific guidelines and policies will be developed prior to the sixth operating month.

Austin Kinetic will offer several support options, including hourly support services, with the option to buy in blocks of 40 hours at a discounted rate.  Blocks purchased will be valid for 180 days from date of purchase.  Additionally, semi-annual service contracts will be available.  Contract pricing will be negotiated on a per-contract basis.

• Project work will be billed and estimated on a per-project basis.
• Web and ASP hosting will be billed on a per-system basis.

Operating systems supported (limited to current and three previous revisions): 

• Novell NetWare
• Red Hat Linux

Hardware supported (hardware configurations must be validated by OEM):

• All open desktop, server, storage, and network systems.
• Dell, ADIC, Storagetech, and HP tape drives and libraries.
• Additional hardware will have to be reviewed on a per-case basis.

Software packages supported (Restricted to implementation and initial configuration):

• Microsoft Exchange
• Lotus Notes/Domino
• SUS Messaging Center
• Microsoft SQL server
• Veritas Backup Exec / Net Backup
• Legato Networker
• Additional packages will have to be reviewed on a per-cases basis.

Service offerings: 

Austin Kinetic has several pre-set packages available for general monitoring of a customer’s network equipment and applications.  The packages are categorized by the type and use of equipment to be monitored. An initial one-time setup fee of $500 will be required per physical site at the onset of any service agreement. This amount is not affected by the number of systems to be monitored at the designated physical site. The customer will be required to provide Internet access to the monitoring server. Out-of-band notification can be added for an additional $50 per month plus a one-time, per-physical-site, $150 initial setup fee.

Basic Server Management*  $350 per month Austin Kinetic provides professional management of operating systems, including Windows, NetWare, Red Hat Linux, and Solaris. This service is perfect for companies that want to manage their own applications, but not deal with the ongoing hassle of tuning, securing, and maintaining the operating system. We will take the burden of ensuring you get the proper services for your specific server and operating system.

• A system audit to document your architecture and suggest improvements
• 24/7 technical support of the server and operating system from experienced engineers
• Security and bug patch notification for the operating system, and when approved, a service call will be scheduled for installation.*
• Monitoring the network availability of one IP.
• Monitoring the server’s disk usage, processor usage and load average
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal

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Application Server Management Services*   $450 per month. Ensuring your applications are available and running at peak efficiency is a 24/7 responsibility. Austin Kinetic offers comprehensive application monitoring and management so your customers and employees will be able to use your applications without significant unscheduled interruption. We offer a complete range of management services tailored to remove the burden of ensuring your applications are up and getting the proper maintenance. 

• A system audit to document your architecture and suggest improvements 
• 24/7 technical support of the server, operating system and applications from experienced engineers 
• Security and bug patch notification for the operating system and applications, and when approved, installation
• Monitoring application and network availability
• Monitoring application response time
• Monitoring the server’s disk usage, processor usage, and load average
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal 
• Periodic activity reports

* Except for the initial system audit, service time to repair or otherwise service the monitored system is not included in this monitoring agreement.

Database Server Management Services*  $500 per month. Ensuring your Oracle, MySQL, and MS SQL 2000 databases are configured and maintained properly is a time-consuming task for IT departments. Austin Kinetic can augment your internal skill set with comprehensive database server management. We offer a broad range of management services and will take the burden of ensuring you get the proper services for your specific server and databases. Typical database services offered by Austin Kinetic include:

• 24/7 technical support of the server, operating system and database from experienced engineers 
• Security and bug patch notification for the operating system and database, and when approved, installation 
• Monitoring database and network availability 
• Monitoring database response time 
• Monitoring the server’s disk usage, processor usage and load average 

Network Device Management Services*  $450 per month. Network devices – firewalls, load balancer, routers, switches and hubs – must be properly configured and maintained to ensure network security and reliable operation. Austin Kinetic offers a broad range of network management services and will take the burden of ensuring you get the proper services for your specific network.

• A network audit to document your topology and addressing scheme 
• 24/7 technical support of the network devices from experienced engineers
• Security and bug patch notification, and when approved, installation 
• Maintaining the security of firewalls 
• Monitoring bandwidth usage 
• Monitoring network device availability and performance 
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal  

Benefits of Security Management Services (Priced determined on a per-site basis.) Maintaining the security of your Internet-based systems is more important and more time consuming that ever. Austin Kinetic removes the burden of protecting your systems by offering 24/7 security management that combines intrusion detection and vulnerability scanning. We also will not burden your existing hardware as a pre-configured 1U server is installed in your network to handle the intrusion detection and vulnerability task.

• Identify misconfigured firewalls
• Catch attacks that firewalls legitimately allow through (such as attacks against Web servers) 
• Document hacker attempts that fail 
• Watch for insider hacking 
• Identify users installing unsecured software on their machines 
• Recognize unauthorized machines using the network
• See incorrect IP space utilization

Austin Kinetic will ensure your intrusion detection and vulnerability scanning system is properly installed and maintained. This includes configuring the system, testing the pattern matching, updating scanning profiles, monitoring 24/7, reporting suspicious activities or vulnerability, and providing a monthly report.

Data Backup*   $50 plus a one-time setup fee of $150 per backup server. There will be an additional $100 per-site, per-month charge if tapes are required to be kept off-site.

Protecting your organization’s data is critical. Austin Kinetic will manage your data protection system to ensure that your data is protected by tape backup. While Austin Kinetic cannot be held responsible for lost data, we will ensure that validated and tested backups occur on a regularly scheduled basis. The customer will be responsible for procuring and installing the necessary hardware. Austin Kinetic will configure and monitor the backup software, monitor and test backup jobs, and perform needed file restoration.

* This service does not require the $500 site setup fee.

Market Analysis Summary how to do a market analysis for your business plan.">

The Information and Technology Service industry is expected to grow at 8.58% per year through 2010.     –U.S. Department of Labor (2003) http://www.bls.gov/iag/iag.services.htm

We will be primarily focusing on mid-sized companies with 500 or fewer employers.  These companies typically do not have large internal IT departments and could benefit the greatest from our offerings.

4.1 Market Segmentation

The information in the market analysis table gained from the U.S. Census Bureau, http://factfinder.census.gov/servlet/GQRGeoSearchByListServlet?ds_name=E9700A1.  Though the data is based upon 1997 data, it is representative of the local market’s potential.

4.2 Target Market Segment Strategy

Austin Kinetic is interested in servicing companies that are large enough to show direct P&L benefit from information technology investment, but not large enough to maintain their own permanent IT staff.  The business groups targeted in the market analysis table represent the largest groups in our target area that fit our interests.

4.3 Service Business Analysis

Austin Kinetic is in the business of satisfying companies’ information technology infrastructure needs.  We will provide service at various levels from consulting to installation. Services will be sold on a per-customer/case basis with heavy personal interaction between Austin Kinetic sales representatives and prospective customers.

4.3.1 Competition and Buying Patterns

In this industry that Austin Kinetic, word of mouth and reputation are king. While a limited amount of highly focused marketing will be effective, most contracts are gleaned from social contacts and networking.

Strategy and Implementation Summary

Austin Kinetic’s initial funding will be from its founders’ personal funds. Word-of-mouth and industry networking will be Austin Kinetic’s key source of clients. The company’s success will be based upon the service and satisfaction of customers to the point that they willingly refer new business.

5.1 Competitive Edge

From the onset, Austin Kinetic will have over 20 years of cumulative experience in the information technology field with a very broad range of hands-on experience. This, combined with a keen sense of customer service and satisfaction, will differentiate Austin Kinetic from its competitors.

5.2 Marketing Strategy

5.3 sales strategy.

Sales will focus a bit less on building relationships and more on solidifying confidence in Austin Kinetic’s competencies and skills. Our primary focus will be to answer the question, “how can Austin Kinetic best meet a customer’s information technology needs?” Delivering this answer in a clear, concise proposal allied with competitive pricing will be the key to closing deals.

5.3.1 Sales Forecast

Sales are forecast with an emphasis on project work at the onset. In the first few months, we will be primarily occupied in conducting short-term one-day to one-week projects while building Austin Kinetic’s reputation and brand name. Within the first six months, Austin Kinetic will have signed three annual service contracts, doubling that by the end of the year and each semi-annual period thereafter. Sales contracts will be set period contracts paid by monthly installments.

As a service business, our only direct costs would relate to the time spent by employees in responding to customers’ needs. Our employees are all paid a set salary, and not by hourly billing, so we have no direct costs of sales; these salaries can be found in the Personnel Plan.

5.4 Milestones

Austin Kinetic will have very simple marketing milestones geared toward industry networking and beginning to build name recognition.

Web Plan Summary

Austin Kinetic’s Web presence will not only serve as a medium for the company’s marketing message, but also will serve as an important tool for our customers. Customers will be provided with the ability to manage and monitor their accounts from anywhere that has access to the Internet. Additionally, consultants in the field will be able to track time and work journals through the site as well as develop and print immediate job estimates.

6.1 Website Marketing Strategy

Austin Kinetic’s Web presence will be utilized as a tool to assist the company’s overall marketing strategy. It will serve as a point of reference for information about the company and its services, and in a small part, lend credibility to the marketing message.

6.2 Development Requirements

Austin Kinetic’s site will reside in a two-tier environment. A back-end database will be utilized to manage customer data. The site will be developed with the assistance of a contracted professional developer.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

At the outset, Austin Kinetic will maintain five part-time employees, its founders. These employees will be responsible for all aspects of the business and serve in both managerial as well as technical roles.  As the business grows, additional engineers will be hired. We anticipate that during the fourth year of operation, the original five employees will be free from any technical duties and concentrate solely on their management responsibilities. At this time, Austin Kinetic will look to add a full-time sales and marketing manager as well.

7.1 Personnel Plan

Business permitting, Austin Kinetic will maintain a staff of five engineers through most of FY 2007. A secretary will be hired at the start of FY 2006 to assist with telephone and office management. At the end of FY 2007, an additional engineer will be brought on board as workload dictates. Beginning FY 2008, the original founding members will be transitioned from field work and into management, replaced by additional engineers.  Additionally, a full time marketing/sales representative will be hired. 

Compensation projections were made with annual merit increases of 5% for staff and 15% for the founders. The table also shows a profit sharing plan starting in the second year, based on 5% of the previous year’s net profits. These bonuses will be divided equally among staff members, including owners.

Financial Plan investor-ready personnel plan .">

Austin Kinetic will initially grow with project work, beginning to build service contracts from the six month point forward. The company will increase its project work to 2,560 man hours per month and increase its service contracts count by six each year. The initial growth will be financed primarily out of the pockets of its founders. The company will fund all growth from the cash flow of the business, remaining debt-free.

8.1 Important Assumptions

At the onset, the founding members of Austin Kinetic will take on much of the financial burden of running the company. There will be no need for dedicated office space until FY 2006 when we expect to open an office in Austin. Until then, Austin Kinetic will compensate travel-related expenses, if any, incurred in the course of business. The only foreseen recurring expenses will be voice mail services, marketing, insurance, Internet access, and Web presence. The lion’s share of funds will be held by Austin Kinetic to develop cash reserves for future expansion and a business climate buffer.

Customers will be billed on an hourly basis of $120. Engineers will be paid a salary, plus $25 per hour for on-call and overtime. Employees who establish the new project/contract will be paid a 5% bonus of the total project / contract price. Business call time of cell phones will be reimbursed.

8.2 Break-even Analysis

The table and chart below show our break-even analysis. As a service business, we have no direct cost of sales. Our break-even point ni the first year is therefore equal to the amount needed to cover our operating expenses, including payroll. We will reach break even, in the third month.

8.3 Projected Profit and Loss

In the first year, we will be based out of the founders’ homes. Adam Authortisement has renovated his garage for use as a meeting space and general office, when we need to get together as a group. Utilities in the first year represent the cost of home high-speed Internet access for all five employees ($45 each per month). This access is necessary for communications between personnel and for file transmission for all project and service work. 

After the first year, it will be more cost-effective and attuned to our growth to rent a space in downtown Austin, where we can consolidate equipment, combine utilities, and have a central location for our work and our secretary. Office space rented beginning FY 2006 is forecast to be $2,500 per month.

After the first month, Marketing and Promotion expenses are set at 5% of the previous month’s and year’s sales.

8.4 Projected Cash Flow

We have no sales on credit; all service accounts and projects are paid in advance, in installments. We anticipate no problems with our cash flow. By staying debt free and keeping expenses down, we expect a significant positive cash balance by the end of the first year.

8.5 Projected Balance Sheet

Our Balance Sheet is quite solid. We will build our asset base slowly over the first five years, expensing most of our computer and hardware equipment to offset taxes, since they will need replacing every two to three years.

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379.02, Computer Related Consulting Services, are shown for comparison.

8.7 Long-term Plan

Austin Kinetic anticipates maintaining a steady profit percentage and plans to build cash reserves to an amount which would cover operating expenses for twelve months should any catastrophic event occur.  This will be a moving target and be recalculated on an annual basis as the business cash flow changes.  There has been no pre-set limit placed upon Austin Kinetic. Its founders see the possibility of expanding the company into a global force ranked equal to today’s top Fortune 500 companies.

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Blog » Business » Outsourcing Plan: Why You Need It and How to Make It

Outsourcing Plan: Why You Need It and How to Make It

The key component of every business is the ability to adapt. In order to build a successful business, one must monitor the needs of customers, partners, market, budget, company goals and standards and provide a win-win situation for all sides.

It’s a big responsibility and hardly managed on its own. As the business grows, so do its needs, but before you find yourself buried in work and anxiety, consider trying outsourcing as a way to keep things afloat.

Whether you run a small business or a big company, outsourcing allows you to keep up with the competition by giving a certain percent of work to a trained professional or other company for an affordable price. This way you can use the outside resources to reduce costs and implement innovations through great talent and professionals from across the globe. Also, with additional help, you will have the time to focus on the main functions of your business.

What to outsource

Almost any part of a business can be outsourced depending on necessity. There are two main outsourcing processes – BPO and KPO. Business Process Outsourcing (BPO) is a cost-effective way of outsourcing a portion of non-core or critical activities of the business to a third party. It includes a lot of fields, from money management, marketing development, data entry, to customer services, IT help, and online research.

On the other hand, Knowledge Processing Outsourcing (KPO) may not give financial benefits, but it helps in value. It is based on outsourcing the main (core) functions and requires knowledge of expertise – legal services, analytics, business and market research services, data conversion and others.

The most effective choice lies in outsourcing parts you can’t afford, or don’t need, only a few times a month:

• Professionals for bookkeeping and financial analysis
• Repetitive tasks – IT tech accounting, systems, network support, customer support, etc.

How to prepare

Don’t rush! The strategy is crucial for efficient outsourcing. To create a well-developed plan, first, you must thoroughly examine your business and set a clear goal. Retain the strong suits of the company; if something is working for you there is no need to change it. If you are running a small business, avoid outsourcing areas that directly impact customers.

Once you have established your main objectives and expectations, consult with your partners and/or an expert. Research and feedback can provide great suggestions for improvement. Complete market and risk analysis to be fully prepared for the possible outcome. Make a list of the criteria for quality, expertise and necessary costs for maintaining a standard you and your customers expect.

Other things to think about are pro and cons of outsourcing to freelancers vs. companies. The decision between the two depends on the type and quantity of work that needs to be done. With a good freelancer, projects can be innovative, precise and cost a lot less than a company would charge.

The problem is they are not always dependable and available all the time, whereas companies offer control quality and 24/7 availability. Even though it seems reasonable to pay more for consistency, remember that nothing is 100% secure. Bigger issues can occur when outsourcing offshore. It is harder to scale a small business with operational issues, delays, and unpredictable taxes. That’s why it’s important to know how to manage your remote workers .

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How to choose.

When it comes to choosing the right option for outsourcing , keep in mind that the responsibility is mutual. Don’t hire the first party you contact. There are a few factors to consider before making a deal:

• Flexibility
• Language barriers

To avoid mistakes, always check credentials and construct a solid contract with outlined specifics:

• Clear expectations
• Defined roles and rights
• Exit strategy – termination or date of renewal

Communication is incredibly important, at every step of the way. Secure access to the latest technology for easier workflow and better results. Regular checkups and a common work platform ensure a more productive environment and lower the risk of delays and mistakes. So make sure you choose the right software solutions for your business.

What to avoid

Considering the time, we usually spend online, every layman can determine if there’s something wrong with a certain website. They can discover a hoax lurking behind the corner. Your professional expertise gives you, even more, experience in this area.

So, if your gut is telling you that there’s something is wrong with a company that you are considering making your temporary partner, don’t ignore the alarming signs. Minding your own safety is quite important when outsourcing, so you should take appropriate precautionary measures and protect yourself.

The best way to do so is to make a list of things you should check every time you get in touch with an unfamiliar business. First of all, you should pay attention to the URL – if there are any irregularities there, chances are you found a fraud.

Browsers like Chrome, Internet Explorer, Firefox and Safari can help you with this – when a website is legit, they give their approval by placing a green bar before the URL. Otherwise, you will be able to notice a red warning that states “not secure”.

Furthermore, you should do some private snooping. It’s quite common that businesses have a testimonial section that quotes customers and businesses they’ve worked for in the past. If you want to be sure that a certain company is legit, you should simply get in touch with listed names and ask for their opinion.

Finally, the last item on your checklist should be social platforms. Primarily, if a business you’re evaluating doesn’t have accounts on social networks, there must be something wrong with it – every serious company is active on them.

However, if you find links that lead to profiles, it will be simple to spot if a business is legit. Both satisfied and unsatisfied users don’t hesitate when leaving their comments and rates, so after only a couple of minutes of scrolling, you’ll be able to know what to expect.

Overall, outsourcing is an excellent aid for expanding a business. Although it comes with some risk, the reward is a lot higher, if properly executed. The only question is: “Do you want to add outsourcing to your operational plan?”

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Catherine Park

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• Learn the Secrets to Making Your Business Better Than Your Competition - July 1, 2019
• How to Jumpstart a Business Using Minimal Financing - October 12, 2018
• Outsourcing Plan: Why You Need It and How to Make It - November 24, 2017

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• Outsourcing

Outsourcing 101: When and How to Outsource

As a business owner, you know that you eventually want to scale your business — but how? A big part of scaling is outsourcing some of your work! In this article, we’ll look at how to know when to outsource versus doing it yourself, how you can start going about it, and what some of the benefits are.

What is outsourcing?

Outsourcing is when one company hires another company to do work for them. The alternative is that you handle that work in-house. If you’re a newer business owner — especially a freelancer/solopreneur — you might outsource some of your work to another freelancer, since it’s cost-effective.

For instance, I own a blogging and SEO agency. A few years back, my bookkeeping and accounting became complicated enough that I could no longer manage them on my own and do a good job. So, I hired someone to do it for me.

When to outsource: How do you know it’s the right time?

As a business owner, it’s too easy to fall into the mindset of, “Well, I can just do this myself,” especially because that means you don’t have to spend money for someone else to do it.

But there are absolutely times when it’s smarter to invest in outsourcing instead!

Here’s the simplest scenario: If you have run out of hours in the day, then your choices have become:

• Stop growing your business because you have no more time, or…
• Keep growing by outsourcing and paying another person for their time.

Now, what if you still technically have time left in the day? Should you still outsource? Quite possibly. When I’m considering outsourcing, I ask myself two questions:

• Will this save me time, which means it’ll also save — or make — me money since I’ll have more time to focus on growth?
• Is there someone who can do this task way better than I can?

If you answer “yes” to either of those questions, then it might be a good time to outsource.

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Let’s talk about that first question. Let’s say, as an example, that you have a social media management agency . Maybe you spend five hours a week solely editing video content for YouTube, Instagram, and TikTok. That’s a lot of time editing videos! Imagine you hire a video editor and clear up those five hours. You just saved yourself a decent chunk of time. You can then allocate those five hours to sourcing leads and reaching out to potential clients. Now, you’re in a place where you can make money, all thanks to the fact that you outsourced that time-intensive video editing.

Let’s move on to that second question next. Yes, you know your business better than anyone else. But let’s consider our video editing example again. There are professionals who focus entirely on this skill . So, it’s safe to say that they’re probably more adept than you are (and that’s how it should be). So, in this case, not only are you saving time, but the work they’ll produce is going to be of a higher quality, which means your clients will be happier, which means you might even be able to charge more for that content.

This is the magic of outsourcing!

When shouldn’t you outsource?

The simplest way to look at it is this: If outsourcing something won’t give you any sort of return, then it’s probably not a wise idea.

That return might be time, which is incredibly valuable. Or, the return could be money.

So, before hiring someone to help you, ask yourself, “Will outsourcing this save me time or money, or make me money?” If the answer is “no,” rethink your strategy.

The benefits of outsourcing

We’ve already touched on these, but let’s do a quick recap!

• Outsourcing can save you time, and time is your most valuable asset. You can then use this now-spare time to grow your business, be with your family, or better prioritize self-care.
• Outsourcing can improve the quality of your work. Hire people who are better at that task than you are!
• Outsourcing can make you money. Use that spare time to focus on growth, and your business is going to have new opportunities.

I know that outsourcing might seem like an expense. And you might be thinking, “Well, if I just do this myself, then I save all that money!” However, you need to remember that outsourcing is an investment because it’s going to provide some sort of return.

How to start outsourcing

This could be a whole article in and of itself, so I’m going to stick with a few basic tips to get you started with outsourcing.

• If possible, start with low-hanging fruit. Outsourcing can be scary, I know. Pick something that’s low-maintenance and less sensitive. For instance, video editing is less sensitive because your video editor will only be communicating with you — not your clients or your general online following.
• Begin small. No one is saying that you have to outsource everything at once. In fact, you probably shouldn’t. Focus on one or two tasks at a time.
• Shop around. Don’t immediately go for the cheapest option, because remember that if that person or company produces low-quality work, you’re either going to have to spend time fixing it yourself, or pay them (or someone else) to fix it for you. Compare your options to see who’s both cost-efficient and high-quality.
• Consider trialing two people/companies. I learned this one the hard way. Sometimes, you have to try outsourcing a few times before you find the right fit. If you can manage it with your budget, consider narrowing down your outsourcing options to your top two picks and see who performs better.

Finally, I want to leave you with this, as a gentle reminder: Even if you’re not doing the work, as the owner of your business, you’re still responsible for it. So, should the client not be happy with that work, you have to own it. “The person I outsourced it to messed up” definitely won’t fly! Yes, have a conversation with that person. But as far as our clients and customers go, it all comes down to us, the business owners — whether the end result is good, bad, or downright ugly.

When to outsource: It’s intimidating but worth it

If you’re thinking there’s a learning curve here, you’re right. Outsourcing means you’ll have to learn how to interview, hire, submit payments, train people, and manage them. But once you get over that hump, the benefits of outsourcing make it all worthwhile.

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Understanding the Benefits of Business Plan Outsourcing

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Introduction

Business plan outsourcing is the act of assigning certain aspects of a company's business plan to an outside professional. A company may outsource certain aspects of the business plan, such as financial analysis, legal writing, research, and more, in order to free up their internal resources for other tasks and to build an optimized solution. By outsourcing certain components of their business plan, companies are able to gain access to experienced specialists who can bring their expertise and experience to optimize the plan.

Benefits of Business Plan Outsourcing

• Access to Experienced Professionals: Outsourcing provides access to experienced professionals who have relevant knowledge and expertise in the specific field.
• Increased Efficiency: Outsourcing specific components of the business plan can help a company save time and resources, and improve efficiency as the outside professionals can complete the tasks quickly.
• Reduced Risk: By outsourcing, a company can focus their efforts on tasks that are more pertinent and specialized to their core business, which can ultimately minimize their risk.
• Cost Savings: By outsourcing components of the business plan, a company can save money by not hiring permanent employees and from the economies of scale that come from the outsourced professionals' experience and knowledge.

Increased Efficiency in Business Plan Preparation

Outsourcing business plan preparation yields greater efficiency than handling the work in-house. Companies benefit from the time savings associated with delegating the work, as well as the expert guidance of professionally trained writers and planners.

Time Savings Through Outsourcing

As companies struggle with limited resources, it is often difficult to divert the time and energy necessary for preparing a business plan from scratch. Furthermore, if the team is inexperienced in putting together a business plan, this could easily lead to time wastage, with the risk of not being able to complete the work within the desired timeline. Outsourcing the business plan preparation relieves this problem, as experienced professionals can quickly and accurately compile your business plan, allowing the team to focus their attention on the core projects and goals.

Expertise of Professional Writers and Planners

A professional business planner brings years of experience and expertise to the task of developing and executing a successful business plan. They have the knowledge to identify and extract the essential features of the business and use the resources and skills of the team to develop a practical and effective plan. This process increases the overall competency of the company, since the professionals have the skills to bring out the best in their client’s business. Additionally, they aid in the figure out the best approaches to every critical component of a business plan.

• Creative thinkers that understand how different markets, competitors, and trends are affecting a businesses.
• Accurate and up-to-date analytics that help to identify risks and realistically project future performance.
• Strategic advice on how to maneuver through economic highs and lows.

When it comes to putting together a comprehensive, comprehensive, and accurate business plan, outsourcing is a great option. With the experience and expertise of trained professionals, companies can reduce wasted time and resources, increase efficiency and productivity, and gain insight into the many aspects of their business.

Cost Reductions

When outsourcing a business plan, there are several cost-saving advantages to consider. Most importantly, outsourcing is more cost-efficient than maintaining an in-house team, as it eliminates the need for additional staff, infrastructure and overhead costs. Additionally, outsourcing can facilitate growth in your operations by providing a range of specialist services and skill sets to increase productivity and efficiency.

Staffing Costs

Outsourcing a team of professionals to manage your business plan can be a far more cost-effective approach than hiring, training and managing employees. By outsourcing business plan services, you can avoid the costs associated with hiring additional staff and having to pay related expenses such as payroll, taxes, benefits and car parking.

Growth Costs

Outsourcing can also help to reduce growth costs associated with investing in new infrastructure, applications or additional personnel. As outsourcing frees up existing resources by providing specialist skill sets, it can help to break down barriers to growth and provide solutions to solve complex and challenging issues.

Outsourcing a business plan is an excellent way to benefit from cost savings, as well as access specialist skills and expertise. Companies who outsource can rest assured their business plan is in the best hands and managed and delivered in the most effective manner.

Quality Assurance

Business plans are used for crucial decisions, and the quality of the information you provide within those plans can determine their reliability. Outsourced business plans should offer you an assurance of the quality and accuracy of the information delivered. Quality assurance protocols used by experts should include research on subject matters, market analysis and existing resources, that go beyond a high level of detail but they are tailored to suit your particular requirements.

Reliability of Results

When outsourcing a business plan, you should look for professionals who can deliver results tailored to your specific requirements and offer the best data to help you make a well-informed decision. The reliability of the results should meet the highest quality standards in the industry, providing accurate information you can trust.

Detailed Planning Process

The decision-making process when creating a business plan should include an in-depth analysis of current market conditions, trends, and competition. An expert that offers business plan outsourcing should also provide you with a detailed planning process that includes research on industry-specific subjects and data based on relevant sources. A good process should also identify the cost-benefit analysis for various projects, understand the realistic expectations for future performance, and the resources needed for the completion of the business plan.

By understanding the quality assurance protocols and process that businesses use to create outsourcing plans, you can make an informed decision on the quality of work and information you will receive. Reliable and detailed results can provide the assurance of accurate information when making crucial decisions.

Benefits to External Audiences

When a business chooses to outsource their business plans, the impression it has on external audiences can be immense. Furthermore, there are noteworthy benefits and advantages that businesses can benefit from when relying on external services for their business plans.

Professionalism

Hiring an outside service provider to create a business plan conveys a sense of professionalism to external parties, such as potential clients or investors. It demonstrates that the company understands the importance of a well written and crafted business plan, and that it takes its plans and strategy seriously. Consequently, it is more likely to receive the attention, respect, and consideration from these external parties.

Enhanced Credibility

Similar to the way an outside service provider can increase the company’s professionalism, outsourcing the development of a business plan can also bolster its credibility. Working with an experienced and knowledgeable service provider can guarantee the quality and accuracy of the plan, emphasizing the professionalism of the organization and highlighting its commitment to excellence. This can have a strong positive impact on the company’s credibility.

When considering the benefits of outsourcing a business plan, external audiences should also be taken into account. Partnering with an external service provider can significantly increase a company’s professionalism and credibility in the eyes of potential clients, partners, and investors.

Aligned Goals and Strategies

The success of a business plan depends not only on properly identifying a business’s objectives, but also on how well those objectives are met. Outsourcing a business plan requires an understanding of how to establish an effective and efficient strategy to meet goals. Working with a business plan consultant can help create a plan with realistic objectives and manageable strategies.

Strategic Direction Established

When outsourcing a business plan, it’s essential to have a plan in place to ensure the objectives of the plan are properly established and achievable. A business plan consultant can help identify the strategic direction the business should take, which can guide the decisions made for the business plan itself. This means having clear goals for the plan and strategies to reach them. The consultant can also help determine how to track results, which can allow better decision making in the future.

Core Objectives of Plan Defined

Before outsourcing a business plan, it’s important to identify the objectives of the plan. A business plan consultant can assist with this, helping to create plan goals to ensure success. This can include topics such as growth and financial targets, identifying opportunities, and creating strategies and tactics to meet objectives. Having clear objectives can help ensure success and can make the outsourcing process easier and more efficient.

• Strategic direction established with clear goals and strategies
• Core objectives of plan are defined and measurable
• Results can be tracked and performance is managed

Throughout this blog post, we have discussed the various benefits of creating and outsourcing a business plan. By outsourcing a business plan and creating a customised plan that specifically targets your company’s needs, businesses can generate and navigate growth more easily, reduce costly mistakes, and free-up their own resources for more effective tasks. Utilising the methods of a business plan outsourcing service, companies can access the support of professionals knowledgeable in the latest strategies, tactics and talents.

Summary of Benefits of Business Plan Outsourcing

It is clear that through the process of business plan outsourcing, there are many benefits available to those savvy enough to seek out these services. Companies with an outsourcing strategy stand to gain by:

• Establishing a well-defined business plan
• Gaining a better understanding of the market
• Developing an organisational structure
• Creating accurate financial projections
• Making smarter decisions derived from current market information
• Reducing time and cost to completing a business plan

Encouragement of Companies to Consider Outsourcing Business Plans

For any business concerned about the risks associated with customer uncertainty, slow growth, product innovation, and market competition, a well-designed business plan is one of the most powerful tools for creating bottom-line success. Companies must consider the value of outsourcing business plans and pay attention to the specific details of outsourced services which are critical for success.

Invitation for Further Discussions

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• 6 EFFECTIVE STRATEGIES FOR OUTSOURCING BUSINESS DEVELOPMENT

6 Effective Strategies for Outsourcing Business Development

Companies constantly seek innovative ways to drive growth, expand market reach, and maintain a competitive edge. As a result, outsourcing business development has emerged as a strategic solution for companies looking to leverage specialized expertise and resources to accelerate their growth journey.

This article will explore six effective strategies for outsourcing business development to help companies unlock their full potential, access new markets, and optimize their growth strategies. 

Let’s delve into the key strategies that can reshape your business development landscape and lead your company to new heights of success.

What is Outsourcing Business Development?

Outsourcing Business Development is a business strategy where companies or organizations delegate certain business development functions to external third-party service providers.

Business development involves activities and processes to create and implement growth opportunities for a company, such as finding new clients, identifying potential markets, and developing strategic partnerships.

When a company decides to outsource its business development, they entrust these responsibilities to specialized firms or agencies with expertise in generating leads, exploring new markets, conducting market research, and nurturing relationships with potential clients. 

Outsourcing Business Development can benefit startups, small and medium-sized enterprises (SMEs), and companies looking to expand into new markets or industries. It offers access to a pool of talented professionals without requiring extensive hiring and training, resulting in cost savings and increased efficiency. 

Moreover, outsourcing allows businesses to be more agile and adaptable, as they can quickly scale up or down their business development efforts based on market conditions and organizational needs.

Read more: 30+ Best software outsourcing companies in 2023

Types of Outsourcing Business Development

Outsourcing Business Development can involve various specialized services depending on a company’s needs and goals. Some common types of outsourcing business development services include:

1. Lead Generation

Lead generation is one of the primary areas where companies often choose to outsource business development. 

Identifying and nurturing potential customers or clients can be time-consuming and require considerable expertise and resources. By outsourcing lead generation to specialized firms, businesses can benefit from the experience of dedicated professionals who excel at prospecting, identifying high-potential leads, and nurturing them through the sales funnel. 

This allows the internal sales team to concentrate on closing deals and building relationships with qualified leads, ultimately boosting the overall efficiency of the sales process.

2. Market Research and Analysis

Market research is a crucial component of business development, as it provides valuable insights into consumer behavior, market trends, competitor analysis, and emerging opportunities. 

Conducting comprehensive market research requires specific skills and resources, and outsourcing this function to external experts can lead to more accurate and complete results. 

By leveraging the expertise of market research firms, companies can better understand their target audience, make informed decisions about product development, pricing strategies, and market entry, and align their business objectives with market demands.

3. Sales and Partnership Management

Managing sales operations and building strategic partnerships are critical for sustainable growth. However, these tasks can be resource-intensive and require a high level of relationship management and negotiation expertise. 

Outsourcing sales and partnership management functions can ensure that these essential aspects of business development receive dedicated attention from professionals skilled in client relationship management, contract negotiation, and fostering collaboration with partners. 

As a result, companies can build strong, mutually beneficial relationships with clients and partners, leading to increased sales and business expansion opportunities.

4. Marketing and Branding

The importance of effective marketing and branding cannot be overstated in today’s competitive business landscape. However, developing and implementing successful marketing campaigns, creating compelling content, managing social media channels, and maintaining a consistent brand image demand specialized skills and creative expertise. 

By outsourcing marketing and branding efforts, companies can access a team of marketing professionals, graphic designers, content creators, and social media experts who can craft and execute powerful marketing strategies that resonate with the target audience. 

This enhances brand visibility, boosts customer engagement, and helps the company stay ahead of competitors in the market.

Benefits of Outsourcing Business Development

Outsourcing Business Development offers several benefits to companies seeking to optimize their growth strategies and market presence. Here are some of the key advantages:

• Cost savings: Outsourcing business development can lead to significant cost savings compared to hiring and training an in-house team. Outsourcing providers often operate in regions with lower labor costs, allowing companies to access skilled professionals at a fraction of the cost of maintaining an internal team.
• Access to specialized expertise: Outsourcing firms specialize in business development and have experienced professionals in various industries and markets. By outsourcing, companies can leverage the expertise of these specialized teams to drive growth and capitalize on emerging opportunities.
• Focus on core competencies: Outsourcing business development tasks enable companies to focus on their core competencies and primary business functions. This concentration on key areas enhances efficiency and productivity, allowing the internal team to concentrate on strategic activities that directly contribute to the company’s success.
• Flexibility and scalability: Outsourcing allows businesses to scale up or down their business development efforts based on market demands, seasonality, or specific project requirements. This adaptability makes companies more agile and responsive to changing market conditions.
• Reduced time to market: With the assistance of outsourcing partners specializing in market research and lead generation, companies can expedite identifying and entering new markets. This can dramatically reduce the time to market for new products or services, giving businesses a competitive advantage.
• Access to global markets: Outsourcing business development to firms with international reach allows companies to explore and enter global markets more effectively. These outsourcing partners can provide valuable insights into local cultures, regulations, and business practices, facilitating successful market entry and expansion.

• Risk mitigation: Outsourcing business development spreads certain risks across the outsourcing partner, reducing the burden on the company. Additionally, established outsourcing firms often have risk mitigation strategies and contingency plans in place, providing added reassurance to the company.
• Enhanced business networking: Outsourcing firms engaged in business development activities can represent the company at industry events, trade shows, and conferences. This exposure facilitates business networking opportunities, potentially leading to valuable partnerships and new client acquisitions.
• Improved lead generation and conversion: Specialized outsourcing providers can employ data-driven strategies and advanced lead generation techniques to identify high-quality leads. Moreover, they can efficiently nurture these leads through the sales funnel, increasing the likelihood of successful conversions and boosting revenue.
• Objective perspective and innovation: Outsourcing partners bring an objective perspective to the business development process. They can offer fresh ideas, innovative approaches, and best practices from their experience working with multiple clients in different industries, enhancing the overall business development strategy.
• Rapid scalability for growth: When companies experience rapid growth, outsourcing business development can facilitate scalability. By relying on experienced outsourcing providers, businesses can expand their operations and reach without the constraints of hiring and training large in-house teams.

3 Reasons Why Outsourcing Business Development Fails

While outsourcing business development can bring significant benefits, it is not always a foolproof strategy, and there are instances where it may fail to deliver the expected results. Some common reasons why outsourcing business development fails include the following:

1. Lack of Clear Communication and Alignment

Clear and effective communication between the company and the outsourcing partner is critical for a successful outsourcing relationship. Outsourcing arrangements can often involve multiple stakeholders, dispersed teams, and even different time zones, making communication more complex. 

When there is a lack of clear communication, misunderstandings can occur regarding the company’s goals, expectations, target audience, and market strategy. The outsourcing partner might not fully comprehend the company’s unique value proposition or brand identity, leading to misaligned efforts and ineffective implementation of business development strategies.

2. Poor Selection of Outsourcing Partner

The success of outsourcing business development hinges on selecting the right outsourcing partner with the appropriate expertise, experience, and cultural fit. Companies that hastily choose an outsourcing partner without thoroughly evaluating their capabilities may encounter challenges down the road. 

If the outsourcing firm lacks relevant industry knowledge, an understanding of the company’s market dynamics, or a proven track record in similar projects, their efforts might not yield the desired results.

3. Insufficient Monitoring and Performance Evaluation

Once the outsourcing partnership is established, ongoing monitoring and performance evaluation are essential to ensure that the outsourcing partner meets the company’s expectations and delivers value. 

Without regular performance reviews, it becomes challenging to identify potential issues or deviations from the agreed-upon strategies. Lack of proper monitoring can lead to complacency, missed opportunities for improvement, and a lack of accountability from the outsourcing partner.

6 Strategies for Outsourcing Business Development

Outsourcing business development can be a strategic move to accelerate growth and access specialized expertise. To ensure a successful outsourcing partnership, consider implementing the following strategies:

1. Define Clear Objectives and Scope

To begin the outsourcing process, defining clear and specific objectives for the business development initiatives you plan to outsource is essential. Identify the key areas that require external support, such as lead generation, market research, sales support, partnership management, or marketing and branding efforts. 

By setting well-defined goals, you provide the outsourcing partner with a clear understanding of your company’s vision and the expected outcomes. Clearly outlining the scope of work helps avoid miscommunication and ensures that the outsourcing partner focuses on delivering the desired results.

2. Thoroughly Vet and Select the Right Partner

The success of outsourcing business development hinges on selecting the right outsourcing partner. Conduct thorough research to identify potential firms that align with your company’s values and objectives. 

Look for partners with relevant industry experience, a track record of success, and a skilled team capable of delivering your required services. Consider the outsourcing partner’s communication, collaboration, and problem-solving approach to gauge their compatibility with your company’s culture. 

Seeking referrals, reading client reviews, and conducting interviews with shortlisted candidates can aid in making an informed decision.

3. Establish Open Communication Channels

Effective communication is the backbone of any successful outsourcing relationship. Establishing robust lines of communication from the outset of the partnership is essential. 

Regular virtual meetings, video conferences, and timely email exchanges can help keep both parties informed about progress, challenges, and adjustments needed. Implementing collaboration tools and project management software can facilitate real-time communication and document sharing, promoting a shared understanding of objectives and tasks.

Moreover, the company should provide the outsourcing partner with comprehensive documentation and resources that outline the brand’s positioning, target audience profiles, and competitive landscape. This knowledge transfer ensures the outsourcing partner understands the company’s vision, allowing them to tailor their business development efforts effectively.

4. Set Key Performance Indicators (KPIs) and Metrics

Key Performance Indicators (KPIs) and metrics are crucial in measuring the success of outsourcing business development efforts. 

Collaborate with the outsourcing partner to set specific, measurable, achievable, relevant, and time-bound (SMART) KPIs aligned with your company’s growth objectives. The chosen KPIs should reflect the outsourcing partner’s deliverables and their impact on your company’s overall performance. 

Regularly monitor and evaluate the outsourcing partner’s performance based on these KPIs to ensure that progress aligns with expectations and that any necessary adjustments can be made promptly. Transparent reporting and data sharing should be encouraged to facilitate a clear understanding of the outsourcing partner’s contributions and achievements.

5. Foster Collaboration and Knowledge Transfer

Treating the outsourcing partner as an extension of your team fosters a collaborative environment that drives success. 

Encourage knowledge transfer by sharing essential information, market insights, customer feedback, and internal data that can support the outsourcing partner’s decision-making process. Additionally, involve the outsourcing partner in relevant meetings and strategy sessions, allowing them to gain deeper insights into your company’s objectives and challenges. 

This collaborative approach enhances the outsourcing partner’s understanding of your business, enabling them to make informed decisions and implement strategies that drive growth effectively.

6. Establish a Clear Contract and Confidentiality Agreement

To ensure a smooth and productive outsourcing relationship, it is crucial to create a comprehensive contract that outlines the terms, deliverables, timelines, and responsibilities of both parties. 

The contract should include clear confidentiality and data security clauses to protect sensitive company information. A well-defined agreement helps establish expectations, minimize misunderstandings, and provides a foundation for a successful outsourcing partnership.

Outsourcing business development has proven to be a powerful strategy for companies seeking to bolster their growth and navigate the complexities of today’s ever-evolving markets.

The six effective strategies outlined in this article offer a roadmap for companies seeking to optimize their business development efforts through outsourcing. By combining these strategies with a collaborative mindset, businesses can forge robust outsourcing partnerships that yield tangible results and propel them toward lasting success in an ever-changing global marketplace.

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Sample Outsourcing Business Plan

Here is a business plan for starting an outsourcing business.

Like most new businesses, launching an outsourcing business will present a lot of challenges. Being able to overcome them is where most entrepreneurs find deep satisfaction.

The process begins with writing an outsourcing business plan.

This requires a lot of considerations and deliberations with the end goal being to create a well-written plan that’s easily implementable.

OUTSOURCING BUSINESS PLAN SAMPLE

For many business owners, the need to get or attract funding is primary. With a good plan, that is very achievable. Basically, your outsourcing business plan helps reveal the viability of your business idea.

More importantly, your plan serves as a tool to implement your business strategies and also monitor its growth.

Key Sections you must include in your Plan

In a bid to create a great plan, certain points or sections need to be covered. These serve as a framework around which the entire plan is developed.

They include the executive summary section, company or business description, products & services section, as well as the market analysis section.

There are other equally important sections like the strategy & implementation, organization & management, as well as financial plan & projection sections.

With all of these combined, you have an easily implementable sound plan. But what’s contained in these sections? Let’s find out.

i. Executive Summary

This is the first section of the plan in order of arrangement. It’s the section potential investors will want to see before anything else.

It’s called the executive section because it provides a brief overview of your outsourcing business plan. In other words, this section can be referred to as the condensed version of your business plan.

As expected, the executive summary section should be highly summarized with main points such as your outsourcing business name and location, the products and services on offer, mission & vision statements, as well as the specific purpose of the plan.

Let’s discuss these points in brief.

Business Name & Location

You’re expected to have figured out a befitting name for your outsourcing business before writing your plan.

As part of the introduction, a location must also be provided. All of these provide a starting point for readers to follow and to understand more about your business idea.

Products & Services

What type of services and products do you intend on providing?

This is a key detail of your business plan investors will be interested in. Because this is the executive summary section, it’s necessary to avoid getting into all the details as there’s a whole section for it in the main plan.

Mission & Vision Statements

The mission statement for your outsourcing business should clearly state the goal you plan on achieving as a business. In other words, it articulates your business’ purpose by stating the why.

For the vision statement, the current and future objectives of your outsourcing business are brought to the fore.

In basic terms, your vision statement should embody your dream for the business and adopts a long-term perspective.

Specific Purpose of the Plan

Without a specific purpose, your business plan will be deficient.

What do you want your outsourcing business plan to achieve? For some entrepreneurs, the purpose might mainly be for strategic planning while for others, it might be to attract investments or other reasons.

State your purpose for having the plan.

ii. Company Description

A broad look at your business operations is necessary with key areas to be looked at like short and long-term goals as well as how you intend to make a profit.

This detail among several is important to investors. Also, the legal structure you’ll be adopting is important. What more? The company description will require adding a summary of your business’ growth.

Financial or market highlights will need to be part of the details to be added here. Provide a brief history of your outsourcing business as well as the problems you intend to solve through your services and products.

Who are your target clients? Will you be working with suppliers? Include such details included here.

iii. Products & Services

Anyone in the dark about the services and products your business will be about should be enlightened by the information they get from this section.

This will require a detailed description of your services with the main emphasis being customer satisfaction.

If ongoing research and development activities are leading to the development of newer products, such should information should be included here.

What advantage(s) does your outsourcing business have over its competitors?

iv. Market Analysis

An in-depth marketing analysis is required to gain a better understanding of the business.

With such knowledge, you’re able to demonstrate that to your audience by covering key areas of operation such as providing a sketch of your target market segments with demographics where necessary.

To measure up, you’ll need to assess how you stand relative to your competitors by identifying their strengths and weaknesses.

You should also be able to provide marketing data on historical, current, and projected operations through an in-depth analysis of the market.

v. Strategy & Implementation

Marketing and sales are primary determinants of growth for any business.

With the help of an operating plan, provide cost and pricing details of services and products as well as any promotions you intend on embarking.

You want to also state how you intend to reach your target audience and capture a fair share of the market.

vi. Organization & Management

A competent organization and management team must be in place to aid with the smooth running of your outsourcing business.

Under this section, provide an organizational chart that clearly identifies and describes key employees and the departments they occupy.

Who is/are the business owner(s)? You’ll need to go into more detail by providing names, percentage ownership, and level of involvement in the business.

Moving from the business owners, provide the profiles of your management team members.

vii. Financial Plan & Projection

It’s always advisable to seek professional help when putting the financial plan together. This won’t be necessary if you’ve got great accounting skills.

Otherwise, have an accountant help out with details such as the historical financial data, as well as having realistic prospective financial information.

With these sections carefully written and included in your plan, you should be ready to proceed with implementation. You also get the added benefit of attracting funding for your outsourcing business.

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Sorry, there are no results matching your search., outsourcing: a strategy for all models.

Having a plan for every type of outsourcing delivery model is key to reaching positive outcomes.

Pricing strategy for each segment and across all segments

Micro-Sourcing is a modern hybrid outsourcing strategy which contracts for multiple delivery models. Outsourcing deals always come down to two key components: performance and price. We covered performance  Outsourcing: Performance management equals ROI (kpmg.us)  now it is time for everyone’s favorite—price. Pricing should not be considered from a singular point of view. The right strategies are found on a spectrum from fully fixed for the entire scope to a combination of fixed and variable to fully variable activity based. KPMG recommends a pricing structure that is low maintenance and minimizes financial risk but allows flexibility to adjust to demand and volume fluctuations and delivery model changes without renegotiating. Managed services are historically delivered as a combination of fixed and variable; although over the past three years, it has, in many cases, transitioned to fully fixed for the entire scope; which, interestingly enough is aligned to the market trend of industry-based solutions. At the same time, as-a-service has become the norm and is fully variable. Both models have value and both models are necessary to support a hybrid outsourcing strategy. Thankfully, all models are already tested in the market, are low maintenance, and have the necessary contract structures to minimize financial risk. The key to success is including all of them in the commercial agreement and knowing when to switch between models. This topic was covered in the decision and governance framework from Blog 4  Multiple delivery models . Which leads us to our next blog: Continually adapt to the demands of the business with Micro-Sourcing.

If you would like to read previous blogs in this series, visit  Outsourcing (kpmg.us).

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Business Process Outsourcing (BPO): Definition & Best Practices

Learn what business process outsourcing is, the benefits of BPO, and how to maximize the value of BPO including top tips and strategies.

Last Updated

October 31 2023

Juggling the many moving parts within a growing business isn’t easy. But you don’t have to do it all in-house. The right business process outsourcing (BPO) company can help you save time, money, and other resources that can be invested elsewhere as you grow your business. In this article, we'll be covering the following:

• Business process outsourcing definition
• What BPO is used for
• Examples of business process outsourcing solutions
• Examples of business processed outsourced across industries
• Main subsets of BPO
• The three main types of business process outsourcing
• Business process outsourcing benefits
• Business process outsourcing companies
• Potential risks of business process outsourcing
• Business process outsourcing best practices

What is Business Process Outsourcing (BPO)?

Business process outsourcing, or BPO, is the practice of contracting out certain business operations or processes to a third-party company .  

Typically , companies that work with a BPO partner choose to outsource business processes that are non-core or non-differentiating, meaning they are not a key part of the company's competitive advantage or central to its mission. These processes may include administrative tasks, customer service, data entry, payroll, and other functions that are necessary for the operation of the business but are not directly related to its core product or service. . This can help to reduce costs, improve efficiency, and access specialized expertise that may not be available within the organization.

(That being said, there are some cases where outsourcing core processes can be beneficial for a company. For example, if a company does not have the internal expertise or resources to effectively manage a certain process, outsourcing may be a good option. In these cases, it is important for the company to carefully evaluate the risks and potential benefits of outsourcing and to choose a reputable and reliable outsourcing partner. It may also be necessary for the company to implement measures to protect its IP and ensure the quality and integrity of its products or services.)

According to Grand View Research , the business process outsourcing industry was valued at $261.9 billion in 2021 — they predict the market value to be worth $525.5 billion by 2030, meaning a compound annual growth rate of 9.1% between 2022 - 2030. Pre-pandemic, Clutch reported that more than half of small businesses were planning on outsourcing certain processes in 2019. In 2021, that number grew to 80% .

Overall, all signs point to continued growth for the BPO industry — and continued adoption to outsource business functions throughout the small business world. Knowing how to implement these functions into your business strategy will be key to the survival and growth of your business. 

What is BPO Used For?

Outsourced processes are commonly used in relation to both back office operations and front office operations. 

• Back office functions that are commonly outsourced include accounting, data entry, or human resources. By outsourcing these managed services, organizations can save costs, improve efficiency, and access specialized expertise to support their back office operations. 
• Front office functions are commonly used to support customer service and support functions, such as call center operations, technical support, or customer care. Outsourcing these core business functions can allow organizations can improve the quality and effectiveness of their customer service and support, and drive organizational success.

Types of BPO: Onshore, Nearshore, and Offshore Outsourcing

When outsourcing to a third-party company, you may choose to employ an onshore, nearshore, or offshore approach.

• Onshore Outsourcing is also known as domestic outsourcing, and refers to contracting done with companies operating within your own country and/or jurisdiction.
• Nearshore Outsourcing refers to contracting done with companies operating in jurisdictions directly adjacent to yours. For example, a US-Mexican or US-Canadian partnership would be considered nearshore.
• Offshore Outsourcing is done with third parties operating in completely different countries elsewhere in the world.

The decision to work with on-, near-, or offshore partners will be based on a number of factors, such as additional costs, communication needs, and tax codes and other laws. Keep this in mind, as we’ll dig a bit deeper later on.

Subsets of Business Process Outsourcing: A Detailed Overview

Within the broad umbrella of BPO, there are specialized subsets tailored to support specific business areas. Here's an overview of some prominent BPO subsets:

• Knowledge Process Outsourcing  (KPO) : Knowledge process outsourcing involves entrusting a third-party with analytical, strategic, and sometimes administrative tasks. For instance, a company might engage a KPO firm not just to oversee finances but to also scrutinize spending patterns, identify cost-cutting opportunities, and advise on astute investments.
• Human Resources Process Outsourcing (HRPO) : HRPO zeroes in on human resources functions such as recruitment, payroll, and employee benefits management. A practical application might involve partnering with an HRPO provider to oversee benefits administration—this encompasses enrolling employees, handling claims and appeals, and guiding employees through their benefits options.
• Legal Process Outsourcing  (LPO) : Legal process outsourcing pertains to legal functions like document review, contract administration, and legal research. An LPO provider, for example, might manage contract documentation, oversee the contract lifecycle, and offer counsel on contract-related concerns.
• Financial Process Outsourcing (FPO) : FPO is about externalizing financial tasks such as accounting, billing, collections, and financial analysis. By employing an FPO provider, companies gain specialized insights, especially on matters like accounts payable, vendor relationships, and financial compliance.
• IT Process Outsourcing (ITPO) : IT process outsourcing is all about delegating IT tasks like software development, data management, and network support. A typical engagement might see an ITPO firm managing data—inputting it, verifying its accuracy, and analyzing it for business insights. This not only reduces the internal IT team's burden but also ensures data processes run smoothly and efficiently.

Examples of Business Process Outsourcing Solutions

There are many different types of BPO solutions that companies can utilize. Some of the most common processes businesses outsource are:

• Customer Service and Support : Growing companies will usually outsource certain customer service processes to keep up with the demands of their ever-growing customer base.  This can include phone support, email support, and chat support which enables a company to provide 24/7 support to customers and improve the overall customer experience.
• Supply Chain Management : Many organizations outsource their supply chain management operations to a BPO company, who can handle tasks such as sourcing, procurement, logistics, and inventory management.
• Content Moderation and Management : With the digital space expanding, companies increasingly rely on BPO firms for content moderation and management. This involves monitoring and regulating user-generated content across platforms to ensure it adheres to community standards and legal requirements, thereby protecting brand reputation and user experience.

Advantages of Business Process Outsourcing

Now, let’s take a look at the main reasons a company might outsource its internal business functions in the first place. 

1. Save on Operational Costs

According to Deloitte’s Global Outsourcing Survey 2020 , cost-saving is the number one reason companies cite for outsourcing operations.

As Deloitte points out, this is due in large part to the pandemic and ongoing uncertainty small businesses face around the globe. In fact, cost had actually been trending down as an outsourcing factor in recent years — but is now a main consideration for 70% of outsourcing companies.

Basically, if it costs less to hire a third party than to complete a task in-house — and you can trust the third party will do a similar if not better job than your team — it just makes sense to outsource the entire process.

Another consideration here is that cost-reduction is easily quantifiable and measurable. At the present moment, businesses are focused squarely on improving their bottom line in tangible and immediate ways. That said, it again just makes sense that cost-reduction is the top concern when outsourcing processes.

2. Streamline Low-Level Processes (and Some High-Level, Too)

Having a dedicated third party on-hand to take care of specific processes means these processes will run smoothly and without fail.

The key word there: Dedicated.

Since your outsourced partner will be dedicated to completing that specific task, you can be nearly certain it will always be completed as planned. Conversely, if your team is left to juggle this process along with their other responsibilities, it can easily fall to the back-burner should a problem in a completely different area arise.

What’s more, because BPO providers are specialists, they may be able to help you streamline other related processes within your business — even if not necessarily taking them over completely.

3. Maintain Agility and Flexibility

Working with third-party service providers allows teams to quickly fill knowledge and skills gaps and ramp processes back up with minimal delay.

Again, this goes back to your outsourced partner being a specialist: Because they have experience performing their specific tasks for companies like yours, you’ll be able to onboard them in a fraction of the time it’d take to hire and bring aboard a team of employees.

In many cases, you’ll also have the option of scaling your relationship up or down over time depending on your business’ needs. For example, you might ask your marketing agency to take over your email marketing campaigns in addition to your social media efforts. Or, once you have the capacity to hire a full-time email marketing specialist, you can dial back the agency’s responsibility.

At any rate, it’s all about making immediate moves to ensure your business stays productive and competitive.

4. Invest in Impactful Initiatives

With BPO providers taking so much off your team’s plate, you’ll have that much more time, energy, and other resources to invest in more fruitful ventures for your business.

A prime example: A third-party market research provider will continuously feed data to your marketing team, which you can then use to develop engaging marketing content for your customers. In short, your marketing team will spend less time collecting data, and more time actually using it.

5. Grow and Expand Your Business

Thinking big picture, outsourcing can also lead to growth and expansion for your business.

In one sense, it can allow you to expand to new audiences in some cases. For example, if expanding to a new geographical audience, you might outsource customer service to overcome language barriers, or simply to better serve the local population.

Building on the previous section, contracting out your more menial processes will allow you to shift more resources into various other aspects of your business. Perhaps most importantly, you’ll be able to shift your talented employees’ attention to more worthwhile and profitable initiatives — which can lead to endless opportunities for your business moving forward.

Potential Risks of Business Process Outsourcing

However, there are a number of potential risks involved when outsourcing any part of your business processes. 

Though they can be overcome with proper planning, anticipating these risks is the first step in doing so.

1. Security and Compliance Issues

Putting your data and operations in the hands of a third party is always risky.

For one, you need to be completely certain that your provider will keep your data secure, and keep their processes above board. No matter their reputation and track record, though, mistakes happen — and they can end up causing major issues for your company.

Moreover, the simple fact that you’ll be continuously sharing data with a third party means there will always be a risk of misuse or loss. To this end, you need to be sure that both your provider and your team members follow proper protocol at all times.

2. Added Costs and Scope Creep

It’s easy to underestimate the cost and scope of your business process outsourcing initiatives.

Sometimes, this is self-evident: If you’re contracting a process out to a specialist with more knowledge and skills than your team possesses, you might not truly understand all that said process entails.

Or, you and your provider may determine that you actually need additional services (or higher levels of service) after a certain period of time.

(There are also the potential hidden costs of working with a third-party provider in any capacity. More on this in a bit.)

If you’re not clear on scope from the get-go, there’s always a chance you’ll end up spending more than you’d anticipated for business process outsourcing services.

3. Provider Relationship Problems

Maintaining a relationship with your BPO company is crucial.

Unfortunately, a number of barriers can make doing so quite difficult. Geographic barriers, for one, can hinder real-time communication and engagement. Cultural or language barriers can also make true alignment much more difficult for you and your BPO partners.

Even if these factors don’t apply to your relationships, there’s still the inherent cost of keeping in close contact with your BPO providers. If these relationships hit a snag, your business’ productivity is bound to suffer.

4. Over-reliance on Provider

Once you’ve found a BPO partner you can rely on, it can be easy to become too reliant on them.

Of course, things can change at any time, for any reason. Your partner’s pricing or services may change. Tax and other laws might cause logistical problems. Or, a larger company might buy out your partner — and completely change course for the company.

In any case, you’ll be left with a major gap in your business that will need to be filled immediately.

5. Audience Perception and Brand Reputation Issues

Bringing in a third-party provider for any reason can impact your customer relationships, along with your brand’s reputation.

Obviously, if your BPO partner is taking over a customer-facing process (e.g., service & support), the stakes will be incredibly high. Even when working with internal BPOs, though, their reputation can ultimately affect how your customers perceive your brand.

Business Process Outsourcing Best Practices

To avoid the risks discussed above — and to get the absolute most out of the BPO services you use — you’ll need to adhere to a number of best practices.

1. Optimize Your Knowledge Management Processes

A proper  knowledge management system (KMS) is essential for enabling your BPO providers in two key ways. For one, your KMS will house your company’s BPO-related documentation, such as contracts, service level agreements, and statements of work. This makes it easy to deliver the necessary documentation as needed before signing a contract — and also makes the appropriate documents easily accessible to all stakeholders after the fact. Secondly, your KMS will hold documentation related to your team’s workflows, customer relations, and overall approach to operating the company — all of which are required knowledge for your BPO providers. With open access to this information, your outsource partners will be able to hit the ground running, and stay on course over time.

As part of effectively managing the knowledge your BPO contractors need, you should be looking at using knowledge base software as part of your KMS backbone. With a knowledge base, you'll be able to easily organize and share information as needed by the team that you outsource any particular business function to.

2. Define Your Overall Purpose and Business Goals

Before outsourcing any of your internal processes, you should have a clearly-defined reason for doing so.

Typically, this goal will align with one or more of the benefits we discussed earlier. However, knowing this basic goal is only the start of this process.

More than just defining the reason for contracting out, you should also define your rationale for focusing on this goal. If you’re looking to save on costs, how will you be reinvesting the money you save? If you’re looking to gain more traction on a certain marketing channel, what will you do once it happens?

To be blunt, your goal should never be “to make the third party do the work while I rest on my laurels”. Rather, you should always have a plan in place for growing your business in some way once your BPO providers start showing the results you’d hoped for.

3. Define Your Key Performance Indicators

Speaking of getting the results you’d hoped for…

Once you’ve determined a general need to outsource a certain process, you then need to get a bit more specific with your goals. These goals, of course, depend on the process being outsourced.

A few examples:

• When outsourcing customer service, you might focus on improving customer satisfaction metrics like CSAT, CES, and NPS.
• In outsourcing certain marketing operations, you’d look to improve lead acquisition and conversion rates.
• In partnering with a hiring agency, you might be looking to improve how you onboard new employees in an effort to bolster their performance or decrease absenteeism — or to simply decrease your average time to hire.

Also, look outside of the immediate improvements your BPO partner will bring to the table — and consider how your team’s performance will improve in turn. 

4. Identify and Prepare for Potential Risks

While you now know the most common risks of using an external service provider, overall, it’s critical to understand which of these (and other) risks are most pertinent to a given partnership.

Again, data security will be a concern, so you’ll likely want to start here. Before you even start working with a BPO partner, it’s important to define:

• What data they’ll need
• What channels you’ll use to communicate
• How specific data is to be used by the third-party

You can then set rules for your team and your partners to follow when sharing data. Setting permissions, for example, will ensure that data remains accessible on an as-needed basis — and minimizes the chances of it being lost or misused.

From there, you can address the specific risks you’ll be facing based on relevance and potential impact. For example, if outsourcing a specific marketing task, you’ll need to prepare your in-house marketing team to effectively communicate and collaborate with your external partner. Or, if outsourcing basic customer service processes, you’ll need to keep your audience informed of the changes to be made — and of how it will benefit them.

To reiterate once more: There will be risks involved when outsourcing any part of your business operations. In preparing for them early, you’ll minimize the chances of encountering them at all — and at least be able to mitigate the damage if things do go wrong.

5. Identify and Assess Third-Party Providers

As the BPO industry grows, so too will your options when choosing a provider.

Of course, choosing the right BPO company will require some effort on your part. Regardless of the actual services being offered, the right BPO provider is one that:

• Knows and understands the industry and specific processes in question
• Has a proven track record of success with similar partners
• Shows a unique dedication to serving and delivering value to your company

You also need to be sure your provider’s terms are in-line with your future goals and expectations. Often, teams will seek shorter initial contracts with third-party providers to maintain flexibility and test their options with minimal risk — and will then lock in a specific provider once they’ve proven their worth.

To do this, though, you need to be sure your potential partners are willing and able to be in it for the long haul with your team.

6. Spend Time on Implementing Change Management Strategies

BPO involves outsourcing specific business functions or processes to an external provider, which can result in significant changes to the organization's processes, systems, and structures. Without effective change management , these changes can be disruptive and cause problems for the organization and its employees. This is why it should come as no surprise that interviewees from Deloitte's global outsourcing survey stated that they would like to put greater effort into implementing change management as part of the overall business process outsourcing.

For example, without effective change management, BPO can lead to challenges such as resistance to change, communication breakdowns, or loss of productivity. By implementing effective change management strategies, organizations can mitigate these challenges and ensure that the transition to BPO is smooth and successful. 

Additionally, effective change management can help to ensure that the BPO company has the information, support, and training they need to perform their tasks effectively. By providing the BPO provider with the right resources, tools, and support, organizations can ensure that they can deliver the desired outcomes and drive organizational success. 

Spending time on implementing effective change management strategies allows organizations to mitigate the challenges of BPO, ensure that the BPO vendor has the support and resources they need, and drive organizational success.

7. Manage and Improve Your Provider Relationships

Deloitte’s report explains that the many changing dynamics of the modern business world “have made the role of supplier management more critical than ever.”

However, Deloitte reports that this function is “still underpowered in many organizations.” That being the case, strengthening your supplier relationships will allow you to get much more out of said relationship than the “average” company in your industry would.

In short: The stronger your supplier relationships, the better your competitive edge.

Some keys for improving your BPO provider relationships:

• Set clear, comprehensive goals and expectations at the onset of your relationship
• Develop onboarding and transitional workflows for your team and your providers
• Create open lines of internal communication, and inject direct engagement with providers into your internal workflows

Improving your supplier relationships over time involves meeting regularly to review their performance and its impact on your business — and to create an action plan for further collaboration moving forward.

8. Document BPO Lessons Learned

Over time, you’ll gain a better understanding of how to make outsourcing work for your organization.

You’ll be better able to identify:

• What processes can (and should) be outsourced
• The qualities to look for in a provider for a given purpose
• Any red flags to look out for when narrowing down your choices

As these things come to light, it’s vital that you document them appropriately. That way, you’ll be able to cover all the angles when looking to bring aboard a new BPO partner.

Using a Knowledge Base to Support BPO Operations

A knowledge base can be a helpful tool for organizations that use business process outsourcing (BPO), as it can support the transfer of knowledge and expertise between the organization and the BPO provider. 

You can create an internal knowledge base to store and organize information and expertise related to the business functions or processes that are being outsourced to the BPO provider. This can help to ensure that the BPO provider has the information and expertise they need to perform their tasks effectively, and that the organization maintains control over the knowledge and expertise that is being outsourced. 

Additionally, a knowledge base can be used to provide training and support to the BPO provider, by providing access to resources, tutorials, or other forms of support that can help them to learn and develop their skills and knowledge. This can help to improve the quality and effectiveness of the BPO provider's services, and drive organizational success. 

To ensure the most of using a knowledge base to support your BPO operations there are several specific steps that you can take including: 

• Identify the knowledge and expertise that needs to be shared with the BPO provider . Before using a knowledge base for BPO, it is important to identify the knowledge and expertise that needs to be shared with the BPO provider. This can include information on the organization's policies and procedures , products and services, internal processes , standard operating procedures , and other relevant topics. By identifying this knowledge and expertise, you can ensure that it is included in the knowledge base as well as any other related knowledge base articles that can be used to support your BPO provider. 
• Organize and structure the knowledge and expertise in the knowledge base . Once you have identified the knowledge and expertise that needs to be shared with the BPO provider, you should organize and structure this information in the knowledge base. This can include creating categories, sub-categories, and tags to organize the information, and using search and navigation features to make it easy to access and find. By organizing and structuring the knowledge and expertise in the knowledge base, you can make it easier for the BPO provider to access and use this information.
• Provide access to the knowledge base for the BPO provider . After organizing and structuring the knowledge and expertise in the knowledge base, you should provide access to the BPO provider. This can include creating user accounts, assigning permissions and roles, and providing training and support on how to use the knowledge base. By providing access to the knowledge base, you can ensure that the BPO provider has the information and expertise they need to perform their tasks effectively. 
• Monitor and maintain the knowledge base . Once the BPO provider has access to the knowledge base, you should monitor and maintain it to ensure that it remains up-to-date and accurate. This can include regularly reviewing and updating the information and expertise in the knowledge base, as well as monitoring and responding to feedback and suggestions from the BPO provider. By monitoring and maintaining the knowledge base, you can ensure that it remains a valuable and useful tool for the BPO provider.

Use Helpjuice to Equip Your BPO Partners for Success

Your business process outsourcing partners will be heavily reliant on your team’s knowledge and documentation to get up and running quickly — and to stay moving in the right direction.

And it’s your job to get this info to them whenever and wherever they need it.

Which is where Helpjuice comes in.

With our knowledge base software, your BPO partners will always have access to the information they need to get the job done. On your end, you can easily provide access to additional documentation as needed — and can restrict access to it when they’re finished.

Want to check out Helpuice in action? Book a free demo with our team today.

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10+ Outsourced Services to Grow Your Business

Content Writer

As your business grows, work can pile up. One way to manage this is by outsourcing business services to a trusted partner.

Outsourced services let you access quality results and expertise at a low cost. Concurrently, a common misconception is that only big companies that outsource benefit from it. But that’s far from the truth!

Virtual assistants have emerged as pivotal players within this realm, transforming the dynamics of modern businesses. They provide a wide array of administrative and specialized services, helping businesses manage various operational aspects more effectively.

Whether you’re using a remote team to fill a work gap or support your current staff, there’s a wide range of tasks and functions you can outsource. Kickstart your outsourcing journey with the most in-demand virtual assistant services from Magic!

• Outsourcing lets you focus on core competencies while delegating non-core activities to a trusted partner.
• Outsourced services can easily fill a work gap or support your team, boosting efficiency and cost savings, and giving you access to specialized expertise.
• When choosing from the best outsourcing companies, consider the quality of customer support, expertise, reputation, and pricing that best suits your needs.

Why Outsource Tasks to Virtual Assistants

Outsourcing is the practice of hiring a third party to perform a business function or tasks rather than doing them in-house. The decision to outsource tasks to virtual assistants is a strategic move to use resources more effectively.

By leveraging virtual assistants, you can reap many benefits that help you adapt to growing business needs.

Access to Specialized Expertise

Virtual assistants have crucial skills across various domains, such as administrative support , customer service , and data management. Leveraging their expertise ensures high-quality outputs in delegated tasks.

Need a higher level of support? An executive assistant can bridge the gap between the executive team and the rest of the company.

Focus on Core Business Functions

When you outsource virtual assistants, you can concentrate on your primary objectives. Delegating routine and time-consuming tasks to VAs, from calendar management to email management . This way, you can allocate more time and resources toward activities that directly impact growth and profitability.

Cheaper than Hiring Full-Time Worker

Virtual assistant rates can vary depending on the type of tasks they handle and their expertise, but on average, they can be between $10 and $25 per hour.

So, hiring a virtual assistant offers a more budget-friendly alternative to a full-time staff. You can save on recruitment costs, office space, benefits, training, and even the digital tools made available at the enterprise level.

Scalability and Flexibility

Outsourcing business services allows you to easily scale operations. You can adjust the volume and nature of tasks assigned to your virtual assistant, ensuring flexibility in meeting fluctuating demands.

What’s more, if you hire from reputable virtual assistant companies , you can get more perks and options for scaling your remote workforce. For instance, Magic provides dedicated account leads when you hire at least three VAs for better daily oversight and support at no extra cost.

Customize Your Virtual Team Based on Your Needs

What to outsource to a virtual assistant.

When exploring the scope of tasks you can outsource to virtual assistants, the options are diverse and tailored to streamline various facets of operations.

Magic offers a roster of in-demand outsourced services to drive business performance. Whether you’re outsourcing to accelerate business growth or minimize administrative tasks, Magic virtual assistants can help!

Email Management

Data entry and transcription.

Data entry and transcription may be huge productivity blockers, but you can’t just drop these tasks. They’re crucial for keeping and organizing data and files, especially in an online database.

Travel Planning and Coordination

From booking flights and accommodations to arranging itineraries, a virtual assistant can handle all aspects of travel planning, ensuring a seamless and stress-free experience.

Calendar Management

As a busy business owner, setting up a meeting and finding a time that works for everyone can take up a lot of your time.

Email Support

Phone support, live chat support.

In the age of instant communication, having live chat support on your website is essential.

Resolve issues and provide tailored assistance with Magic’s 24/7 AI-powered virtual customer service . Our VAs can manage live chat services efficiently, catering to customer inquiries in real time.

Recruiting Sourcing

As you scale operations, you’ll need people to fill in the work gaps. That said, recruitment can be hard, and small businesses face unique hiring challenges .

Tax Preparation

Payroll processing, record keeping.

To cut costs, most would take on bookkeeping tasks themselves, which takes up too much of their time. There’s also the risk of overlooking data and information—and mistakes can be costly!

Virtual assistants can manage and organize data, ensuring that important information is readily accessible when needed. Not sure which bookkeeping task to outsource? Here’s a bookkeeping services list that can help!

Data Scrubbing

When researching and pursuing potential customers, you accumulate a lot of data. This can make your sales process inefficient, which means unnecessary costs. Get help sifting through, sorting, and managing your CRM data and other online databases.

Lead Generation

Getting quality leads is key to filling in the top of your funnel, but it can be time-consuming and costly. A quick fix: outsource business lead generation services to streamline your sales cycle.

Lead Qualification

Build a virtual sales team and start making the shift to remote work. You can still be involved in the day-to-day business activities, but you’ll no longer have to be the one to handle everything.

Choosing the Best Outsourcing Partner

Of course, it’s important to find the right outsourcing service provider for your growing business. You have the best outsourcing companies in this market today, so it’s just a matter of choosing the one most suitable for your needs.

Expertise and Reputation

When you’re getting help, it’s only logical to get it from the expert.

The first thing you need to look for in an outsourcing company is their background to see if they align with your goals and needs. For instance, if you need to outsource customer support, then it’s best to look into customer service outsourcing firms.

From there, research outsourcing firms, such as the quality of results they provide to their clients. Check out reviews and testimonials from their clients on different platforms as well.

Pricing Plans and Rates

One of the main reasons you’re outsourcing business services is to save time and money. So, it’s only right to look for a company that’ll give you great results at a lower cost.

It’s important to look for a firm that suits your budget and preferences. There are many outsourcing firms that offer flexible plans to match your needs. This way, you can get more value out of your money.

Flexibility and Customization

For a growing business, there will be times when you need to scale up or down based on your unique needs.

Outsourcing can make scaling easier with tailored contracts and access to a global talent pool. Look into the flexible resources and specialized expertise that service providers offer and decide from there.

Ease of Communication and Collaboration

One more factor you should take into account is how you’re going to work with your outsourcing partner. With remote work, setting up a good line of communication and working relationships ‌will make sure things are done the right way.

Look into outsourcing firms that already use the tools and software you use for business. This streamlines the workflow for easier communication and collaboration.

Customer support quality

No matter how much you prepare and make sure everything goes well, some issues may still arise. It’s important to get an outsourcing company that provides good customer support for times like this—and even helps reduce such risks.

Great customer support is also a mark of an outsourcing company’s positive reputation, which equals high-quality services.

Outsource Virtual Assistant Services with Magic

Outsourced services are a great option for growing businesses looking for an affordable but effective way to get work done. It lets you focus on core competencies while delegating non-core activities to a trusted partner.

In a competitive business climate, Magic’s remote workforce can be a powerful tool for growth and success. Our virtual assistants are college-educated and trained remote workers who are within our top 3% of applicants.

Talk to us and learn how Magic can transform your business efficiency and drive growth!

Match With a Vetted Virtual Assistant in 72 Hours!

Li is a writer at Magic devoted to capturing stories that provide insights and spark conversations on a wide range of topics, such as business, tech, and lifestyle. By working remotely as a Magician, they can harness their creativity and explore the potential of AI as a tool for content creation.

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What to Outsource In Your Business

In an interview on his blog, billionaire and founder of the Virgin companies Sir Richard Branson said the following about Steve Jobs:

“I admired Steve Jobs, although he was completely different from me. He used to shout at employees that made mistakes. He did not delegate much, and broke all the rules I believe in. Somehow it worked for him. Apple is one the best brands in the world.”

Branson, on the other hand, delegates a ton; how else could he manage nearly 50 companies at once?

Now, I’m not saying that Jobs’ management style was any better than Branson’s or vice versa. But clearly, even Jobs delegated a ton of business activities. For instance, Jobs clearly didn’t’ do Apple’s bookkeeping.

Both Branson and Jobs are/were masters at delegating activities. Which allowed them to focus on the highest value uses of their time to building their companies.

But a natural question arises for entrepreneurs with regards to delegating. And that is: what should I delegate or outsource? [From a definition standpoint, I consider “delegating” to be giving a task to someone else within your organization and “outsourcing” to be giving a task to someone outside your organization.]

This question is particularly acute if/when you are an earlier stage entrepreneur with limited resources (versus Apple and Virgin who are billion dollar companies).

If you look at your business, there is probably a very long list of activities you could delegate, or rather (particularly if your company is relatively small) outsource.

For example, you might outsource activities related to:

• generating new leads
• computer and IT infrastructure
• bookkeeping
• new product or service development

In addition to outsourcing tasks like these, you may simply choose to outsource tasks that are just plain annoying or take up a lot of your time.

But, once again, if you’re working with a limited budget, you will have to make some difficult decisions about what to outsource, and what to outsource now versus later.

Preparing to Outsource

Even if you had unlimited funds, you would still want to prioritize what you outsource and when. This is because each task, role, or responsibility you give to someone else requires work. There is time required to plan the task, find and train the individual, and support or coach them among others.

For example, if you want to hire someone to call local businesses and set appointments for you, you would need to:

• Develop a general game plan of who to call, how many people, what times of day, and for what purpose.
• Create a list of people to call, or develop parameters for the individual to use to develop their own list.
• Write a script the individual should follow when making calls.
• Create a list of the most frequently asked questions or concerns, to orient the individual on your product or service and what you can do for customers.

As you can see, simply preparing to outsource a task takes times, so you can’t outsource everything.

What to Outsource First

Every business is different and only you can determine what to outsource. However, read the following to see examples, rules and guidelines that I and other successful entrepreneurs have found to be effective.

Task Type #1: Lead Generation Tasks

Since the biggest challenge of most businesses is not having enough leads no matter how great your product or service, lead generation is probably one of the first things I would outsource if you want to make more money. This is particularly true if you think that your investment in outsourcing can be returned very quickly in the form of new sales and profits.

You should specifically consider outsourcing lead generation tasks that you don’t already do, or that you do poorly or ok (but not great).

For example, search engine optimization (SEO) is a lead generation task that most entrepreneurs don’t do, or do very poorly because they don’t have the time to devote to it. Conversely, some search engine optimization firms and outsourced individuals stay abreast of the latest SEO techniques and technologies and can generate significantly greater results than you or your team can in a fraction of the time or cost. Task Type #2: Fulfilling the business you generate

Once you generate leads and convert them into clients, you need to fulfill the orders. Particularly in service businesses, fulfillment often becomes a bottleneck; particularly if you need to perform the work yourself.

This typically results in a “feast or famine” cycle. That is, once you close a new client you are in “feast” mode from the money the new client brings in. But then, you spend all your time fulfilling the client, and when the work ends you are in famine mode. Specifically, because while fulfilling you didn’t spend time on additional lead generation, once the client job ends, you are left without enough revenues and searching for new clients.

So considering putting someone in place to handle all the new business to generate. If not, you’ll likely find your lead generation to be sporadic and less effective, or your customers not getting the quality of service they deserve.

Task Type #3: Other ongoing, repetitive tasks

There are many tasks your business needs to perform over and over again-like bookkeeping, filing, creating reports, compiling data and contact lists into spreadsheets, researching vendors, etc.

Your job is to grow your business by initiating new projects, not taking care of business as usual. So you need to outsource these administrative tasks.

Task Type #4: Your most painful tasks

Each of us has our favorite tasks and our most dreaded tasks. And each of us has strengths and weaknesses. Ideally, you should perform the tasks which 1) you like, 2) which leverage your strengths, and 3) which have the most value to your organization.

And certainly, if a task doesn’t meet any of these three criteria, you must outsource it immediately.

The exception to this (and a warning) is when there is a skill or competency that you really do need to improve in order to be a successful business owner. Decision-making, planning, building a team, and other leadership responsibilities are not always fun, but critical to perform yourself (or with a co-founder or management team if necessary).

Action Plan to get started

With these thoughts in mind, create a list of tasks that you are doing right now that aren’t the highest value uses of your time. Also include tasks you aren’t doing (e.g., lead generation tactics), but should in order to boost revenues and profits.

I realize there often seems to be a chicken-and-egg issue, which is that you need money to outsource projects, but if you spend your time doing those projects yourself, you won’t generate enough revenues or profits to pay for an outsourced person.

The answer is to take the leap. Go ahead and outsource a task or two. You will inevitably find you can generate more revenues and profits with the time you gain from outsourcing. You will eventually start outsourcing (and delegating) more and grow a thriving company.

So make a quick list of the 5-10 activities you should outsource (either because they are a pain, you are not doing but need to do them, or they are low-level repetitive tasks). And then find someone to which you can outsource them.

The Outsourcing Formula

In today’s competitive business environment you can’t afford to 1) pay top dollar for generic resources or 2) take too long to complete projects. What is the solution to avoid both: outsourcing!

In our Outsourcing Formula training program you’ll learn how to inexpensively build a highly productive remote team.

Accounting Outsourcing: How to Hand off Your Financial Tasks (With Recommendations)

Ali Hackett

Reviewed by

May 24, 2022

This article is Tax Professional approved

You’re not an accountant.

So you shouldn’t feel like you have to handle all the finances in your small business.

Outsourcing your accounting and financial admin can unload some of that burden.

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In this guide, we’ll show you the areas you can outsource and help you pick the best experts for the job, so you can get back to doing what you love.

Benefits of accounting outsourcing

When you outsource things you don’t like, aren’t good at, and that steal your time, there are a lot of benefits:

• Time-consuming tasks are taken off your plate without paying full-time salaries and benefits.
• Outsourced tasks usually get done better and faster than before.
• You’re able to scale your business because you have more time to spend on revenue-generating activities.
• By working shorter hours you save your energy and sanity—don’t discount how important this is.

Now let’s talk about the various outsourced accounting services and why you should consider them.

Outsourced payroll

If you’re spending a lot of time doing HR and payroll manually, try Gusto . It’s dead-simple to use and makes those intimidating tasks feel relatively straightforward. You can manage all your payroll and HR benefits from the Gusto platform, and if you ever have questions, you can ask one of their payroll specialists.

If you decide to take their full-service route, you can expect to outsource tasks like payroll setup, payday calculations and direct deposits, payroll tax calculation and form filling, and 941, 1099 , 940, and quarterly state tax returns.

Outsourced bookkeeping services

If you hate bookkeeping, you can always outsource it.

Bench (that’s us) does your bookkeeping for you. We give you a team of bookkeepers, and simple software to track your finances. We’ll reconcile and categorize your transactions, give you monthly financial statements, and put you in direct touch with your new bookkeeper through our messaging app.

Leave the administrative load with us and get more time to focus on revenue-generating activities.

Beyond bookkeeping, Bench can also take care of your tax filing . Whether you’re filing solo or working with a CPA, we’ll do the books and work directly with a tax filing pro to get your taxes filed accurately and anxiety-free. Say goodbye to 1099, 1065, 1120, 1120S, 1041, and 990 forms forever.

Accounts receivable and accounts payable

Outsourcing your accounts receivable and accounts payable means never having to pay or chase down bills again—the stuff every small business owner dreams of.

An AR/AP service will also take care of some (if not all) of these:

• Invoice imaging and storing
• Invoice approval
• Expense allocation
• Online payment approval
• Check processing
• Handling of vendor inquiries
• Order management
• Customer billing
• Collections management
• Cash forecasting & reporting

This can be done for quite a low hourly rate depending on where you’re comfortable outsourcing to. If you want to keep this part of your business closer to home, check for local AR/AP services in your area.

If you’re big enough that you’re considering a controller but not big enough to need one full-time, an outsourced controller might be the right move. A controller will do things like draft financial statements, update your ledger, process cost accounting paperwork, payroll, process accounts payable and receivable, budget expenses, stay compliant with tax laws, and analyze financial data.

Caveat: these can be pretty expensive, and are probably only a fit for established companies.

That being said, the oversight and advanced reporting might make it worth the cost (and outsourcing definitely costs less than hiring a salaried controller). It will depend on your specific needs, but outsourcing could run in the ballpark of $2000–$3500 per month.

Full finance and accounting services

Playing the role of accountant probably wasn’t part of your business plan. As the owner, you want to grow your business and focus on the vision of the company itself.

As you grow, having a professional, outsourced accountant on your side gives you the advantage of proactivity rather than reactivity. Trained accountants can spot red flags ahead of time and notify you about things like cash flow discrepancies. Plus they’ll take care of everything listed above.

Having a skilled eye on your finances at all times will give you peace of mind, as well as the ability to make well-informed financial decisions. Like with a controller, whether or not you’ll need a full accounting service depends on the size of your business.

Who to hire

There are online/remote accounting firms, but based on their low reviews, we can’t recommend any of them in good conscience.

Your best bet is to find a local accountant who can take on the tasks you need, who will only charge you hourly for the work you need. Not sure how to find and hire a good external accountant? Read this .

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