The Ups and Downs of Outsourcing for Small Businesses

The process of allocating the business processes to the outside firms is known by the term Business Outsourcing. Almost all the services ranging from legal, accounting, bookkeeping services to customer support and IT services, can be easily and efficiently outsourced and is fast becoming a business standard.
With the privilege of internet and progressive communication means, the sharing of confidential documents, data banks etc is as easy as within the office walls. For examples in case of company’s accounting tasks, one can easily get their accounting, smsf auditing, bookkeeping etc from an offshore company with the ease like that of full time staff with lesser overheads.

The Ups of Business Outsourcing:-
Outsourcing presents lots of advantages, both to the business and its employees. It is considered to be a highly efficient way to harvest the best talents available in the market on an as needed basis. Some other highlights of outsourcing are:

Staffing Control – Small businesses often face the dilemma of shortage of quality staff. People come and go, seeking quick growth. The companies put in their quality resources to train the hired staff, and later the employees set for bigger firms, taking with them their newly gained knowledge and experience. Thus, instead of constant recruitments and training sessions companies can save a lot of their time and resources by outsourcing their tasks to other firms, without hiring a full time staff.

Economically Feasible – Outsourcing largely reduces the need of in house staff especially for Accounting Outsourcing, bookkeeping and auditing services. The companies get the flexibility to hire experts for months and years yet they can pay them on as needed basis, without incurring any in house management and upliftment expenses.

Focus on Competencies – Outsourcing is a great option for small businesses who cannot afford to hire experts full time. Hiring experts through outsourcing is like transferring the headache to the contractor and focusing on other key business tasks.

The Downs of Business Outsourcing:-
Despite all the advantages mentioned above, there might be a few drawbacks of Outsourcing business tasks to external staff. Here are a few,

Confidentiality and Privacy Threat – In the process of outsourcing business tasks, a company needs to provide the outsourcing firm access to company’s confidential data. Although confidentiality agreements are signed off before such a partnership, but there is always a threat to misuse of classified data in the era of gadgets and internet.

Dependence – Outsourcing Accounting Work also involves transmitting functional uncertainties to the outsourcing contractor as when a company hands over business tasks to another contractor, they are dependent on the contractor’s business tactics, integrity and faith.

Divided Loyalty – Outsourcing firms generally work with many clients, and that may include competitors in the same trade, thus their sincerity may be an concern. They have all the means to leak information etc, or maybe something like inaccuracy or late compliance of their tasks.

In order to get the best out of business outsourcing, a company needs to determine the right tasks and business operations that are appropriate for outsourcing as well as to know how to properly select contractors.


About Tim Davidson

Tim Davidson is a Director of Connect Accounting Pty Limited an Australian company that provides secure and cost effective compliance and SMSF accounting and income tax services to Australian accounting practices and superannuation administration companies. Tim Davidson, Google Plus Profile -

Posted on March 25, 2014, in Accounting and tagged , , , , , , , , . Bookmark the permalink. Leave a comment.

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