When Should a Company Outsource? How to Decide What Time Is the Right Time

February 7, 2024 Mimi Torrington

when is the right time to outsource?

If you’ve considered outsourcing, one of your first questions may be, “Is now the right time to outsource?” Maybe you’ve been growing a team or building a program for a while, but haven’t been able to scale. Or perhaps your back-office admin tasks are finally taking a toll on your in-house resources. Whatever the reason, outsourcing your non-core functions could free up time and money to grow your business. But when should you make the leap? When should a company outsource? We break it down below.

When You Need to Lower Costs

CFO checking quarter results to see how much she saved by using outsourcing

Everyone knows that lowering costs is one of the top benefits to outsourcing, and for many organizations, especially in the midst of current economic uncertainty, outsourcing is top of mind. While considering your options, timing is key. Really, it's up to you whether now is the right time, but whenever you are ready to remove unnecessary costs and make back-office operations more efficient --this is when outsourcing comes into play.

Scenarios vary as to why cutting costs has become a priority, but one thing is constant: outsourcing allows companies to focus on what matters by reinvesting dollars where they will make the most impact. Maybe you need to pour more money into sales and marketing to increase revenue, perhaps you've had cuts already and are looking to fill the gaps or it could be that you need to add tasks to your team's plate but hiring is not in the budget right now. Whatever the reason, if you need to cut costs, outsourcing is a precise solution that fits the bill.

Let's take accounting as an example. When CFOs and controllers look at the budget, many will find that too much is being spent on back-office tasks. The problem is that these back-office F&A needs -- whether accounts payable, accounts receivable, general accounting, or admin -- are vital to the success of the organization. And in many cases, the accounting team responsible is already pushed to their limits as it is. When a need for increased production meets a need to lower costs, outsourcing is the logical next step.

Looking to Cut Costs? Check out our Outsourcing Worksheet to find out how.

Your Company Should Outsource When You Need to Focus on Business-Critical Activities

when should a company outsource?

Adding people to your team to do skills not part of your core business can be daunting, time-consuming and expensive, not to mention limiting to your business growth. By taking the time to attract, hire, train and retain talent in areas outside your core competencies, you're also using up valuable resources that you need to focus on your business-critical. In this case, outsourcing may be your best bet. Many companies outsource their back office, accounting, digital, customer service and more, so they can stick with what they do best --and do more of it.

Many outsourcing providers stand ready to help with tasks outside your core competencies. Even if you are really great at accounting or customer care, is that what your business offers? If the answer is no, going to a third-party makes a lot of sense and can allow you to focus on your core offering, scale your operations, create additional services/products and even, get more business. As this article makes clear, timing is everything and as small businesses start to scale to mid-size, many find that they simply do not have the time to focus on strategy and growth when having to constantly hire back- and front-office team members that could be outsourced.

Look at customer experience (CX) for example. If you serve customers (who doesn't) you'll likely have need of a well-defined CX strategy that includes agents, systems, certifications, office space, scripts, training, equipment and more. Developing such a thing (especially while scaling) is quite a difficult, and expensive, task for anyone not in the customer experience space. This is why call centers are so common among larger, B2C companies and have been for decades. But the thing is, you don't have to be a large business, or B2C, with a need for hundreds of agents to outsource CX. Neither do you have to need scores of accountants to outsource F&A. In fact, you can start with a team as small as one offshore. With a provider like Personiv, you can start with a small team and grow from there, all while getting the same outsourcing benefits that the enterprise orgs have used for years.

Listen In: [PODCAST] When Is Outsourcing Your Accounting The Best Move?

You Should Outsource When Your Company Is Growing… Fast

company celebrating growth

Anyone who has led or helped lead a startup or business in growth-mode knows the excitement that comes when things really start rolling. Your production has picked up, your customers are increasing or you see big growth on the horizon. It's an amazing feeling that also comes with a side of "What do we do now?" Growing fast brings a certain set of challenges and many orgs find that this is when they need help from a third-party. Once again, now is the time to outsource.

Starting a relationship with a BPO provider when you see that need to scale can help you organize what can be outsourced and what should be kept in-house while building an outsourced program that will last (and grow with you). For outsourcing providers, scaling IS their core business. Need a team of one, 10 or 100, all with specialized skills who can work in your systems? No problem. What better way to scale than with an outsourcer that builds large teams day-in and day-out with incredible efficiency.

Watch the Video: Smart Outsourcing for Startups - Scale Fast & Grow

Another consideration when you're scaling: hiring. Like we discussed above, attracting talent in this market and going through the hiring process can pretty much stall operations in other parts of the business. Hiring takes time and with a hiring shortage out there (looking at you accounting market), this task often drags on with less-than-favorable results. Hiring in the U.S. can take months and you may still be stuck with a candidate that isn't quite right or unfortunately quits on you causing the process to start all over again. Basically, it's frustrating out there and when you're growing there is just no time. Did you know that we have hired about 600 people all with technical skills in design, SEM, website building and more -- within six weeks for a client in the past? It's a task we are comfortable with because this is what we do. So, if the thought of hiring a new team in a non-core skillset is holding you back from growing at the speed you'd like, outsourcing is a great solution.

Want to Hear More: [CFO WEEKLY] Episode 1: Scouting For Accounting Talent With Cliff Edwards

When Should Your Company Outsource? When You Need More Hours in the Day for Strategy

how to decide what time is the right time

How much of your day is dedicated to admin tasks? We wondered too, so we asked CFOs in our F&A Leadership Survey (get the final report here) how much of their time is spent on transactional vs. strategic work. Would you believe that 88 percent of CFOs said they didn't have time for strategy because they were stuck doing transactional tasks like AP, AR and closing the books? That's a lot of business leaders who are in the weeds every day. The problem with leading a small- to mid-size company is that you're wearing a lot of hats and when you're in player-coach mode, strategic work is what falls by the wayside. But strategy is also what will get your business to surpass your goals and hit those margins.

Rather than focusing time and attention on non-core tasks that have to be done with deadlines looming, hand those tasks over to an outsourcing provider so you can focus on your priorities and engage in meaningful work again. Imagine not having to worry about the details because you have a trusted team ready to provide you with standardized KPIs and organized reports on a regular basis. This is the beauty of outsourcing -- removing those back-office, admin tasks that zap your time and energy so you can focus on what matters most.

What About Quality: Spotlight on Manila - If I Outsource My Accounting How Talented Will My Team Be?

So whether right now is when you are looking to cut costs, grow your business or focus on strategy, outsourcing is a solution that can do all that and more. So, when should a company outsource? for many organizations -- now is the time to start. Ready to look for a provider? Check out our post on choosing the best outsourcing provider.

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