Do you ever feel like your workload is mounting, but the resources and staff to manage it just don’t exist? It can be difficult to keep up with all of the complex financial planning tasks while still having time to work on long-term growth strategies. But with outsourcing and offshoring, there may be a way to create more effective solutions for dealing with existing workloads or new ones that arise. In this blog post, we’ll cover what outsourcing and offshoring are as well as how they can help make life easier – both now and in the future – for financial planners.
Often outsourcing and offshoring are two buzzwords that are used interchangeably, and are easily misunderstood or confused. Let’s dive in and further explore these two approaches.
What is Outsourcing?
Outsourcing is a business practice in which a company hires a third party to perform tasks, handle operations or provide services for the company. Outsourcing can be undertaken for any services or processes across your business. It may be to outsource the manufacturing of components of a product to a factory that is better equipped. Whether it’s watering plants to administration and marketing duties, the decision to outsource is typically weighed against the internal resources and available skills to do that task, which could be allocated to someone else. Outsourcing can be used effectively when you may not have the time or skills available in your business to complete a task as effectively.
There are options when it comes to outsourcing, and this is where the jargon can get a little confusing. You can choose to outsource services onshore (within your country), nearshore (a neighbouring country) or offshore (to a more distant country).
Pros and Cons of Outsourcing
As a tested strategy to improve operations, outsourcing is used by both large companies and small businesses to reap many benefits. These advantages include cost savings when a company employs an outsourcing strategy to better focus on the core aspects of the business. Outsourcing non-core activities improves efficiency and productivity because the smaller tasks are being handled. Some of the benefits include a faster turnaround time, access to specialised talent, increased competitiveness and service quality.
On the other side, companies that outsource and share sensitive information regarding business operations to a third-party provider must consider a non-disclosure agreement to prevent fraud or theft, as a necessary step in due diligence. Maintaining effective communication with contractors in different time zones and language barriers are also considered limitations of outsourcing.
What is Offshoring?
Offshoring is the transferring of activities or ownership of a business process or operation to a different country. While it’s unusual for companies to outsource their core activities, offshoring crucial operations is quite common.
Benefits include hiring specialised talent or producing goods at a competitive price and savings on taxes and tariffs. The limitations of outsourcing often centre around the social and cultural differences. Having clear expectations and communication around what roles, accountability and deliverability are essential to making the most of your outsourced resources. This is why it is important to vet any company that you are going to outsource work to, whether they are local or offshore, to make sure that they are going to be able to support and streamline your business.
The Competitive Edge for Small Business
Companies across the globe have widely utilised outsourcing and offshoring as effective methods for lowering production costs, enhancing business operations, and providing superior quality customer service.
As technology improves and it becomes easier to compete globally, outsourcing and offshoring are powerful resources that can allow small and medium businesses to streamline processes while delivering higher-value products or services.
If you are hoping to outsource some of your operations or procedures you must thoroughly evaluate if the advantages of executing a plan override any potential downsides. To build an ideal business strategy, you can always consider merging offshoring with outsourcing as well. If this is a consideration for your Financial Planning company, contact Valenta today to discuss our Virtual Assistant and Virtual Paraplanner office support options.