Benefits and drawbacks of outsourcing

Many of the responsibilities involved in running a successful business extend far beyond the services you provide to customers. For example, while your expertise may be in a specific trade such as plumbing or electrical work, you'll also need to manage a variety of business tasks and administration. If you’re ready to grow and expand your business, outsourcing can take the weight of some of these tasks, so you can focus on what you do best. 

In this guide, we'll explore the benefits and drawbacks of outsourcing and discover what tasks are more appropriate to outsource. This should hopefully help you decide whether outsourcing is the right approach for your business.

What is outsourcing?

Outsourcing is the act of hiring a third-party provider to complete tasks that you are either unequipped to do yourself or simply don’t have the time for. This allows trade businesses to focus on their service offering without being bogged down by red tape. 

What tasks should be outsourced?

You can outsource almost any elements of your business, but generally, you might look to outsource any task that you don’t have time for within the business, or that requires specialist skills or knowledge. Commonly outsourced tasks include:

• Business administration Admin tasks such as managing your diary, quotes, answering the phone and paperwork can easily pile up, so outsourcing can help you stay on top of it. 
• Bookkeeping and accounting Careful management of financial records is business-critical - invoicing, expenses, payroll, and tax returns are commonly outsourced to ensure accuracy and compliance. 
• Marketing and advertising Many tradespeople hire external specialists to manage their website, social media, SEO and paid advertising. This can help generate more leads and improve visibility.
• Payroll Processing employee wages, pensions and deductions requires accuracy and knowledge of regulations. Outsourcing payroll can help avoid errors and ensure staff are paid correctly and on time.

Don’t forget to check out some of the technology that can help your business too, from hardware to apps, that can streamline your business processes.

What are the advantages and disadvantages of outsourcing?

Advantages of outsourcing 

As a business owner or expert in your trade, your time is valuable – and outsourcing can be a fantastic way to free you up to focus on your trade or running your business.  

• Access to expert service providers Outsourcing gives businesses access to specialist skills and expertise, particularly in complex legal or financial matters, and can save you money in the long run.
• Lower costs than hiring Speaking of money, outsourcing is typically significantly cheaper than hiring the equivalent level of expertise in-house. 
• Smoother customer experience Having someone to manage your diary and calls means you don’t have to worry about missing an enquiry or quote request, and your customers will feel more supported.
• Flexibility Depending on the type of outsourcing you choose, you’ll likely have a level of flexibility to scale up if business is busy, or down in quiet periods, something that’s much more difficult if you hire in-house. 

Disadvantages of outsourcing 

Unfortunately, outsourcing isn’t a magic wand to magic away all of your admin stress – make sure you vet potential outsourcing solutions thoroughly; handing over vital business information to the wrong company could damage your business.

• Security concerns When you outsource work, it often means you are entrusting sensitive information to a third-party company. This can be anything from financial records to company data. If the company you’re outsourcing to doesn’t have secure data protection, this could pose significant risks to your business.
• Loss of control As a business owner, you will be used to being in control of everything. When outsourcing elements of the business, you lose some of that control, and if anything goes wrong, it’s your business name and reputation that could be damaged. 
• Potential limitations When you hire an employee, you have full visibility over their workload and schedule; when outsourcing, there may be different limitations to work around. You want to be sure that managing your outsourced work doesn’t become more time-consuming than the work itself.

Outsourcing might not be the most valuable solution to a business with a lot of work to cover – there comes a point where it makes more sense to hire someone whose sole focus is on your business. If hiring is new to you, see our guides on how to hire someone for the first time and whether sole traders can hire employees. 

Becoming a Which? Trusted Trader 

Outsourcing is a great way of assigning more administrative and time-consuming tasks to a third party, so you can focus more on your core business responsibilities and the growth of your company. 

If you’re not yet ready to outsource or hire for your team, as a Which? Trusted Trader, you can access legal and wellness helplines to help you stay in control of your workload. Join the scheme now and watch your company flourish.