Outsourcing As A Business Strategy

We are deep in the twenty-first century and since its beginning, the workplace has changed in many ways. The use of the internet is a given, whether its function is for inter- or intra-office communication or as the foundation for various SaaS programs, as required by any particular vertical. The utility of the cloud has become a permanent fixture as companies large and small rely on its capacity to house information contributed by employees and documents shared across all levels of an organization. Both proved their essential need during the pandemic; and since then, with a remote or hybrid workforce, those technological resources are here to stay.

Mr. John E. Dustin, CEO of J.E.D. Insurance & Financial Services Agency, Inc., of Foxboro, Massachusetts, has a lot to say on the subject of outsourcing as a business strategy. “Outsourcing non-core functions through specialized referrals improves [in-house] operations, skills, risk mitigation and scalability,” he begins. That is a broad statement, and it sounds good. But what does it mean?

It means that when a company, a smaller one, for example, outsources non-customer tasks to outside professionals, such as HR, accounting, bookkeeping, IT, legal, or marketing, the benefits far outweigh the costs to engage the services of these professionals. “The best example I can give is, in a lot of companies, they will take the controller or the chief operating person and make them the HR person. There are so many state statutes now and rules about harassment, rules about pay, family leave act, and rules about payroll, and 401k. The best person to manage this is an HR specialist,” he illustrates. A company might not need a full-time HR professional on staff, so a retainer arrangement would give the company what it needs: Outsourcing to a reputable professional dedicated to that subject matter who has access to industry-related resources and task-specific software or other tools.

Speaking as the owner of a retention agency, John says that his company spends a lot of time on summaries and reviews, and helping companies grow. “For me, I want to stick to our core competency. Through my networking referrals, I am able to bring in other professionals to oversee our internal HR practices, accounting, bookkeeping IT, legal, and our marketing. Developing those relationships and relying on the skills these professionals offer, strengthens and supports our company’s own mission to retain clients and help them with the services we are known for. In the long run, this is a cost savings measure,” he explains.

Utilizing the expertise of outside advisors includes two other benefits, which are of paramount importance. These include scalability and risk mitigation. Relying on advisors makes businesses more adaptable toward growth through scalable outsourcing. Such professionals in an advisory capacity come to know the business, recognize trends in the marketplace, and can make recommendations based on both that will benefit the company. A relationship of this nature fosters collaboration and trust.

Regarding risk, utilizing the skills and knowledge of outsourced professionals mitigates distractions, ensures quality output, and is vital to avoiding risk. This is especially true in any of the aforementioned areas. If any of these were to be compromised, considerable time and expense would be lost, and client confidence would be jeopardized. It should be noted that the contract between the outsourced professional and the company must include language of indemnification. This enhances security, compliance, and crisis preparedness. “I'm a big believer in risk mitigation, and the best way to mitigate risk is by getting the best finished product, whether it's a good HR manual, 401k benefits administration, or cyber technology,” John emphasizes.

Bringing it down to a relatable level and proving the importance of engaging the services of outsourced professionals, John says that his company conducted a value chain analysis a few years ago. “A value chain analysis essentially looks at all of your functions and determines where your sales and retention are coming from. Anything that was not directly related to the customer, we elected to outsource. It has made the organization stronger by removing unnecessary distractions. It looks more professional to the outside because we have good policies and procedures in place. We have good accounting, legal, and HR. It gives us the strategic advantage we want.” Sharing what that strategic advantage is, John says it helps his company compete with larger companies. They can attract good clients and focus on managing client services better. At the end of the day, if you outsource to the right vendor, you get a better finished product whether it is HR, accounting, technology, and other services not related to your core business.

Another advantage of outsourcing non-core functions is avoiding burnout. “I would argue all day that a company owner who believes they are saving money by splitting their time and attention between client-related tasks and non-core functions, is going to burnout. Their services or product will not be as good, because they will have spent valuable time on tasks that are not in their wheelhouse,” John states.

While it might seem that doing it all yourself as a small business owner saves money, eventually, it compromises core function and client retention, expedites burnout, jeopardizes security, and calls into question HR compliance, accounting and bookkeeping accuracy, cyber security, and thoughtful, timely marketing initiatives. Instead, outsourcing as a business strategy, as John puts it, “Gives you the freedom to continue to hone your skills and be a subject matter expert on what it is that you do.”

So, as with other changes to the workplace that have provided numerous benefits, such as workforce flexibility and remote document accessibility, outsourcing as a business strategy proves that it has tremendous merit as cost saving, scalability, and risk mitigation measures, while ensuring that the business prospers under the freedom to fully focus on client retention. - Copywritten by Boston Edits, LLC .

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