The Hidden Value of Outsourcing

April 27, 2009 by admin  
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Companies both large and small are increasingly outsourcing their accounting needs. Indeed, in one recent study I read, almost 60 percent of small businesses outsourced some or all of their accounting. Keep in mind that when I say “outsourcing,” I’m not talking about “offshoring” — everyone’s jobs aren’t going to India, for example. Indeed, most outsourced jobs tend to stay right here in the United States.
It’s no secret that accounting is often considered a necessary evil — you can’t operate your business without sound bookkeeping, but in reality, that work is often performed by your management or administrative staff that lacks the expertise to do the work effectively and efficiently. Even worse, diverting resources to accounting means you’ve got less time and talent to do the work of your business.
But I’m willing to bet that even if you think you know the key benefits of outsourcing — like its ability to save your company money — you are still missing the mark.
So why should you outsource? Let me count the ways.
Obviously, cost-cutting is an important piece of the puzzle. For many, it’s the most important one. Outsourcings lets you convert fixed costs into variable costs and to move capital around within your organization. If you care about how you look to investors, then outsourcing should be on your mind, because t lets you direct money that was otherwise locked into revenue-generating activities. And that makes you look more attractive.
But outsourcing also makes you more agile. Think about how much time, effort, and energy goes into launching a new project internally. You can easily take months to formulate a plan, hire resources, get them trained, and put the right management pieces in place before you ever start generating results. But outsourced, that same project can spin up in just a couple of weeks.
And that has the scent of efficiency about it, don’t you think? To put it plainly, most companies have too much internal infrastructure to respond quickly and efficiently to new projects and challenges. No matter how limber you think your company is, outsourcing lets you bypass a bevy of bottlenecks, expenses, and bureaucracy, and allows you to lean on a company that make a business of responding quickly to external requests.
All of this means that by outsourcing, you get to focus on what it is that you actually do — your core business. Whether it’s designing software, selling umbrellas, or running a veterinary clinic, outsourcing helps you concentrate on your business and leave peripheral responsibilities like accounting and managing your taxes to others. At the same time, it reduces your exposure to risk — when you outsource, the outsourcing provider is the organization that assumes the risk for the activity, not your business. And that’s a tangible value when you consider all the federal and state regulation that goes hand in hand with your business’s accounting needs.

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April 7, 2009 by admin  
Filed under Blog