business
HR issues
Is it good to contract out? words | Leah Carnegie, HR Dept
Q
I have a company in Gibraltar and business is growing; the problem is there is just too much business and not enough employees to get everything done. Unfortunately, the company is not in a position to hire new staff right now. However, we do not want to lose any important customers. What should we do? When facing a dilemma of whether to outsource some task, a project, a business process, or a role within an organisation, one of the first questions that comes to mind is what are the pros and cons of outsourcing? Outsourcing services implies you will be getting the best services. Offering quality services that lead to customer satisfaction and that in turn lead to more sales which in turn increase the profits. Therefore your business will run efficiently. When the customers are satisfied, they will give you a positive feedback which will increase your credibility. As you focus on the core activities of your growing company, you will also need to deal with your non-core functions efficiently. Outsourcing work is a tried-and-tested model and is recognised as a long term competitive strategy for success. Outsourcing helps you get the focus back on your core business and control costs at the same time. If you find yourself asking the following questions then outsourcing is for you: ● Are we working at optimum costs? ● Are my resources being utilised effectively? ● Are my current resources capable of supporting new technology? ● Is there a quicker, more effective method to
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handle processes? ● Does my team have the operational expertise to do the task assigned?
There are a few pros and cons to outsourcing; however the pros outweigh the cons. Thus it is beneficial to outsource certain services to other companies. When you hear the word outsourcing, the first thing that comes to mind is how you can save costs. This is the first and the widely known merit of outsourcing. There are a few other pros and they include the following;
The Pros of Outsourcing
to hire the expertise they need. If work is being performed by someone who is an independent contractor, the company simply pays the amount agreed in the contract. No payroll tax or other deductions are taken, which means payment processing is streamlined. Another way outsourcing saves businesses money is that the employer does not have to provide benefits to outsourced workers. Benefit plans are paid for by employers as a way to attract and keep quality workers, but they are expensive. If some work can be outsourced, it cuts down on this expense, which means the business can operate more profitably
Saves Money Cost savings could be the biggest Gives Employers Flexibility When a business reason why businesses choose to look outside chooses to outsource some job responsibilities, the company has the flexibility to buy services only during the times they are needed. Contracts can be written to hire a contractor for a specific time, for a specific project only, or on as as-needed basis. The employer pays only for work performed, as opposed to paying a salary to an employee on a regular basis.
Outsourcing work is a tried-and-tested model and is recognised as a long term competitive strategy for success
Provides access to a Larger Pool of Workers During times when the job market is tight, outsourcing means companies have access to a
GIBRALTAR MAGAZINE • MARCH 2013