Friday, 29 August 2014

Is outsourcing a good idea?

A growing number of companies are outsourcing non-core services in an effort to save costs – but are they considering the potential pitfalls? - that's the question posed by our senior partner Graham Davies.

He said: “When it is done well, outsourcing can save you money on things such as physical overheads and payroll costs, and allow you to focus more carefully on offering a higher quality core product or service.

“It can also, sometimes, give you access to new technology or working systems without the need to invest heavily in the equipment yourselves. But there are some major pitfalls too, which companies must consider carefully before heading off down the outsourcing path.”

Graham explained: “Firstly, if the process is not managed properly, it could harm your company’s reputation. If the goods or services being provided on your behalf are not up to your usual standards, or are arriving late, then it is your image which will suffer, and not that of your supplier.

“It could lead to a rise in complaints, and ultimately end up costing you money through lost business or a tarnished reputation. It is always wise to insist on a test period with any chosen provider, retaining the right to cancel the agreement with immediate effect.

“Thorough research and a smooth handover period is essential. Don’t take at face value what the firms pitching for your business tell you – if they claim to have well trained and experienced staff, find out how they can prove it. I always think it is sensible to see their operation in full swing before putting pen to paper, and you should also ask for client testimonials.”

Graham said it was also important for businesses to remember that, although they may be outsourcing services, they remained legally responsible for the security of any personal data involved.

“Always enter into a written contract with the outsource company which specifies that they may act only on your instructions, and will take reasonable steps to prevent the unlawful or unauthorised processing of personal data.”