Malta Business Review Issue 12 by Adrian Friggieri

Malta Business Review

Business OutsOurcing

Outsourcing Offers Business Owners Great Advantages by David Baker

The majority of entrepreneurs have a great idea and frequently possess great talent to nurture and grow that idea. But many a mistake is made along the road to success with the belief they can do it all when it comes to building a business. “That can really put the brakes on the growth of the business,” says Szabolcs Toth, Director, Management Consultancy and Business Development at Sparkberg, a Malta-based outsourcing Consultancy. “More and more start-ups are realising a way to avoid this pitfall is to outsource the day to day back-office tasks, giving the owner more time to focus on generating income.” Entrepreneurs all too frequently believe that outsourcing is a strategy reserved for mega corporations, but technology has made it a more available discipline for small businesses--and there is an increasing number of case studies which showcase how outsourcing has influenced and had a positive impact on expansion, productivity and most importantly bottom lines. Outsourcing tasks these days has become a lot easier and affordable in large part due to technology which has progressed to the point of professionals being able to work from anywhere in the world. This has been coupled with the readiness and availability of an ever growing pool of qualified professionals who have decided or been forced to leave the corporate world, such as web designers, HR consultants, marketing directors, graphic

designers, bookkeepers, PR directors, IT experts, to name but a few. And a new specialist that can be added to that list is Business Development. “By coming on board as consultants they save the small business owner the burden of paying overheads. This can include taxes, payroll or expenses such as health insurance. And with increasing office rental costs, the expansion into a new space can be delayed,” says Toth Figuring out how to build a business with help from external experts can offer improved competences and economies of scale. David Walsh, the author of the book Source Control, an e-book on effective small business outsourcing is quoted as saying: “Progressive entrepreneurs realise the unstoppable power of outsourcing to handle aspects of their business that are essential but simply don’t make sense for them to deal with personally. Small business, augmented by a global pool of human capital, can compete directly with the biggest players in their space, and win.”

Malta Business Review

Finding the Right Consultant Internet search engines make it much easier than it once was to find capable, reliable outsource providers right across the globe, but it is important to be sure the right partner has been chosen before passing everything over “It is important that for each task that needs to be outsourced, the performance measurements need to be determined,” Toth says. “Some outsourcing providers might focus on delivering results quickly (at the expense of quality) or conversely they take a long

time to deliver a high quality result. There is nothing wrong with either approach as long as there is a clear understanding of what the business wants and what the provider specialises in. Unfortunately there are times when SMEs don’t realise that there are large differences among outsourcing providers and wrong choices are made. So, we insist that there is an open and clear conversation between both parties at the outset in order to ensure both parties are clear as to what these key performance metrics are.”

Making it Work “After a provider has been found and references checked, it is important to put time and effort into creating a specific contract that outlines exactly what performance is expected,” Toth continues. “At Sparkberg we are used to incentives in motivating and focussing us on what is most important to the client rather than our own preferences or assumptions about what they want. “To achieve this, it is important that a client clearly communicates their expectations and the steps included in the job. It is wrong to assume that everyone is on the same page without an in depth discussion, so it is very important that the requirements and expectations are laid out in the beginning, and that nothing is left to assumption.” A very important ingredient in engaging an outsourced activity and getting the results desired, is to step back, relinquish control, and allow what are effectively a company’s new team members to do the job they’ve been hired to do. “There has to be some measure of trust,” Toth says. “If we end up being overlycontrolled, all the savings can easily be lost.”

Performance metrics So, what can one expect to pay a consultant for enabling a company to focus on its core strengths while building a better business for them? It depends on the type of work or service that’s required, the skill level and other specific preferences. “The expression, ‘you get what you pay for’ is true, wherever you go in the world,” Toth says. “Always pay someone what they’re worth, regardless of location. We would stress placing value on outcomes over hours. If an outsourced project or activity doesn’t deliver the outcome the client needs, it doesn’t matter how much time has been spent along the way.

EDITOR’S NOTE

When is the right time to outsource? Determining when the right time to outsource is, depends on a number of factors and is different for every company. In-house staff will already be in place to handle daily operational requirements, but may need external support help to undertake a specific project that perhaps doesn’t warrant the cost of another full-time employee. Every employee has a responsibility to help grow the business but when day to day business starts suffering as a result of the drive towards a bigger and better business that can be the time to consider outsourcing. For start-ups or very small businesses, outsourcing could commence from the outset through perhaps a bookkeeper and/or a virtual assistant and growing the team from there.

So, what to Outsource? Before choosing which tasks can be farmed out, the business needs to be closely examined and its strengths determined. “Businesses need to identify their core competencies and capabilities and focus their own talent management and resources on being the best in their industry,” adds Toth The types of tasks that are best outsourced fall into three general categories and include: •

Highly skilled, or executive, expertise. For example, it may not be necessary to pay a CFO’s salary, but a CFO-level person could come in a few times each month to provide financial analysis and strategic advice as well checking the accounting is being handled properly.

•

Highly repetitive tasks. Purchasing, accounts, entering sale data and logistics could fall into this category.

•

Specialised knowledge. An example might be the new business development. There may not be the budget available, nor the need for a full-time BD person. It is also easier to change to an outsourced provider with the right skill set as needs change.

Reaping the Benefits Outsourcing ultimately offers business owners great advantages. The process allows them to build a team of skilled professionals without adding the expense of full-time employees, and to avoid getting bogged down with tasks that can be completed without personal supervision.

David Baker is a director of Sparkberg, an outsourced marketing and business development consultancy which provides strategic advice and operational support to help companies, big and small to grow, win and sustain more business.

“It’s an affordable, proven strategy for growing a business without getting in the way of day-to-day work, and avoids sleepless nights created when trying to juggle too many balls,” says Toth. “Just as saying no is among the hardest things to do, then trusting an outsourcing consultancy is equally hard for an entrepreneur and small business owner. But when they objectively, ruthlessly and systematically consider their core activities and the steps they need to take to perform them, then the reality that outsourcing CAN be a good thing dawns on them,” he concludes.

He is a veteran of the Middle East and North Africa marketing communications industry having worked in region for over 30 years, the majority of them in international agencies in Bahrain, the UAE and Libya.

In summary, the success or failure of your outsourcing efforts depend on many factors, such as the nature of your business, how the outsourcing arrangement is structured and the in-house employees managing the outsourcing efforts. When done right, the benefits from outsourcing are undeniable affording management the time to focus their time, attention and resources on the company’s core competencies--and spend the time setting new goals and finding ways to achieve them. MBR

During his time in the region he has acquired broad and extensive experience working across a wide range of business sectors, delivering all types of marcomms programmes, ranging from aviation, travel & tourism to education, automotive and healthcare. He also has extensive crisis communications experience handling issues for FMCG, aviation, food and oil clients.