Outsourcing Important Functions In Your Company Part Ii

Jul 31, 2010

In last month’s eNewsletter I wrote about outsourcing senior executive positions in your company.  In this month’s edition I want to talk about a few other positions that can be outsourced.


First of all, why outsource?  Isn’t it better to have an employee who only works for you, and who can spend all of his or her time concentrating on your issues?


Well, the answer is simple . . . Yes and No.


If your company requires full-time concentration in a particular area of importance to the company, it might be best to have a full-time individual be your employee.  Perhaps the most common function in a company is sales.  Not much else happens in a company without someone bringing in new business, and then spending time with existing customers to retain them and expand your relationship.  The owner is often the first salesperson and, when another salesperson is added, the owner tends to spend more time managing that new individual.  As sales grow, more salespeople are added, and you may even need to add a sales manager.


The finance area is another department that tends to have a number of full-time employees.  As the company grows, however, it often makes sense to outsource some of the functions normally handled by Finance. 


The most common function outsourced is payroll.  You would be amazed at how many companies, though, still process payroll in-house.  The reasons most often given for processing payroll in-house are confidentiality and cost:  “I don’t want everyone knowing how much others make” and “It only takes me an hour or two a week to do this, so why should I pay anyone to do it?” 


Well, you are either paying someone to handle the payroll or – worse yet – you are doing it yourself.  What a waste of time and effort!  When you add in the quarterly and annual reporting to your state and the federal government, you are spending more time than you think.  The benefit of an outside payroll service is that they process the payroll and all of the taxes, filing reports as needed, and they also take responsibility if any errors are made.  If you make errors in the processing, you are the one who will suffer.  And, with regards to confidentiality, you can still have a trusted person oversee the whole function.  I cannot name any companies that should be handling their own payroll.


The next area is human resources.  Owners of small to mid-sized companies cannot possibly keep current on the laws and requirements relating to your employees.  You can work with an HR expert on an as-needed basis and, if you get the right advisor, you can not only save money but you can ensure you are handling critical but often overlooked areas such as hiring or terminating employees.  As an owner, you should at least meet with an expert and see how that person can help you.


And, if anything changes more than HR, it might be IT – Information Technology.  Your computers.  Many companies have an employee that takes care of the computers, printers, servers, software, and so on.  The person may be busy, but he or she simply cannot keep up with the changes in technology that affect your company.  At one client, we outsourced the entire IT function and now the company not only has experts overseeing its IT, but the company saved money in so doing.


A long time ago, I outsourced the in-house tax department of a $250 million company.  I learned that, given the right circumstances, nearly any function can be outsourced to the benefit of the company.  You should keep that in mind.  Companies need expertise, but most cannot afford full-time people to provide that expertise . . . nor, in many cases, do they need full-time expertise.


Look around your company, and think about what you need.  I’d be happy to talk with you about your options.


A collection of books from B2B CFO® to help any business succeed. Read the first chapter from books, including the Wall Street Journal’s book, for free.