A question we often get asked is: why should I outsource? Often when people think of outsourcing they are reminded of the time when everyone tried outsourcing to India. In the majority, it was a big fail. However, 20 years later and things are different. Steven Jobs, former Apple SEO, outsourced iPhone production to China to benefit from their remarkably fast supply chain. Nike, Goldman Sachs…they all do it!
Why do Businesses Outsource?
Firstly, it is to do with, business need. Generally, motives for outsourcing are to:
• Reduce and control costs of operation.
• Improve the company’s focus.
• Liberate inner sources for new purposes.
• Increase efficiency for some time-consuming functions.
• Use external resources as much as possible.
• Sharing risks with a partner firm.
Secondly, as nicely summarised by Ryan Khan, founder of The Hired Group with his famous quote:
“Master your strengths, outsource your weaknesses”.
There are always functions which a business does well. There are others that they will do not so well. In order to give a better service to clients and customers, the best thing to do is outsource those that do not perform as well to an outsourced provider, who can do it better. This thereby enables you to concentrate on those which you do well, whilst receiving an improved service on those which you previously did poorly.
Approaches to Outsourcing
From Apple to Nike to Goldman Sachs….everyone is outsourcing. Even small local law firms outsource services from IT, accounting, and transcription services to advocacy. If your business has not thought of outsourcing – why not retrain your mind – think ‘outsourcing’. Below we look at Nike and Goldman Sachs to see how they are approaching outsourcing.
Nike
Nike is the undisputed world leader in the footwear and sports clothing market. It is approximately three times as big as its nearest competitor. It has achieved its top spot by pursuing a 100% outsourcing model in manufacturing. Nike has no plants of its own. Other competitors have started to follow Nike’s lead. Here is an interesting article on Nike’s approach to outsourcing.
Goldman Sachs
Goldman Sachs is the second-largest investment bank in the world. It has stepped up hiring at its offshore location in India. Other banking institutions have started to follow suit. Here is an interesting article on Goldman Sach’s approach to outsourcing.
Where do you start?
If you are looking to start your outsourcing journey, a good starting place is to look at:
• How many employees do you have?
• What functions do you do best?
• How big is your office space?
• Which functions do you think could be done better and possibly be outsourced?
• What processes in the office are time-consuming?
These questions used to be considered the way to gauge a company’s success. Big had to get bigger. Multiple offices are a must! Now it is the same in reverse.
The pandemic changed all that. Smart working practice by outsourcing enables companies to employ fewer people whilst enabling hotdesking or remote working. In other words, by lessening overheads your profit will be greater. Because of this, you will have a greater spend on growing the business!
So, why not retrain your mind – think ‘outsourcing’ – hence the name of this blog post.
Outsourcing
Back office operations are generally never a core function of any organisation. By their nature, they are secondary functions. So, why not outsource these functions to companies who ‘play to win’ in those areas?
In today’s highly competitive digital age, a new and innovative approach is needed to achieve better business outcomes.
Strengthen your position. Ensure you are backed by a team of efficient ‘outsourced’ providers. As a result, you and your team can focus on your key competencies. Retrain your mind – think ‘outsource’!
Any function that is not your central success strategy could be someone else’s!
It makes sense. Before the digital age hit us head-on, outsourcing was considered as solely logistics. Remote access now enables internal systems to be outsourced. Therefore which areas are best suited for your particular business? This is the question. Like any aspect of business, outsourcing takes continual work and refinement, but it is now commonly understood that it is one of the most powerful business enhancements out there.
Which Function can be Outsourced?
There are many areas which can be outsourced. Legal, accounting, human resources and information technology call all be outsourced, to name but a few.
For instance, IT in the main is ‘an outsourcing norm’. As a result of outsourcing a department, you will achieve the following:
• More space
• Fewer overheads
• Less headaches
• More profit!
In effect, you are getting expertise at a fraction of the cost of an internal employee.
Again in the case of Human Resources, it is obvious. Impartiality is essential. Moreover, a non-biased independent body is great when marketing for job applications! Because of this area will see growth on a rapid scale. It is just a matter of time.
Another area for outsourcing is transcription.
So, why do law firms, clinical practices and businesses outsource their transcription needs? Well, for starters, dictating your emails and documents brings immediate cost savings before you even outsource the function!
Digital Dictation brings up to 40% Efficiency Savings
But why? Well, the simple fact is that we can all speak considerably faster than we can physically type. Don’t take our word for it, just look at the stats:
“The average person types between 38 and 40 words per minute”.
A “good rate of speech ranges between 140-160 words per minute.”
This means that dictation is up to four times faster than typing an email or document yourself. Therefore, simply dictating a document is more cost-efficient, giving you and your business more time to be working on other projects. It also enables you to bring in more revenue for your business.
Reduces Costs
When you employ staff you must pay: monthly salaries, PAYE costs, National Insurance contributions, offer a pension scheme and pay a certain percentage of tax per employee. You may give bonuses based on performance. You also have other fixed costs such as desk space and office costs per employee, and the costs of infrastructure like computers, telephones, workspaces etc.
Reduces Unproductive Time
What most employers forget is the indirect costs of employment such as “unproductive” time. Recent research suggests that:
“In an eight hour day, the average worker is only productive for two hours 53 minutes”.
Clearly, by outsourcing your transcription needs, you eliminate any unproductive time. By using OutSec, you pay per minute of recorded dictation (rounded up to the nearest minute) which means you are not paying for any unproductive time. Outsourcing means you are not paying for your transcriptionist to make a cup of tea or coffee. You are not paying for them to have or make a snack or lunch. Unproductive time and office chats are a thing of the past! So, think outsourcing!
Reduces Expensive Office Space
Obviously, by outsourcing your transcription needs, you can reduce the amount of office space you need. According to Business Matters Magazine:
This means that the cost of desk space in London is therefore somewhere between £7,800 to £18,000 per annum. Just on this cost alone, you could approximately have somewhere between 6,500 and 15,000 minutes of dictation typed up by OutSec instead!
Reduces HR Costs
Hiring, training and supervising your firm’s secretarial staff can require an investment of your HR Manager’s time. You need to advertise to find staff. By outsourcing, you never have to worry about any of these HR-related costs. According to the National Office of Statistics, an “estimated 185.6 million working days were lost because of sickness or injury in 2022; this level was a record high, but the number of days lost per worker, at 5.7“.
Outsourcing eliminates these costs.
Holiday Pay
Whilst statutory paid holiday entitlement in the UK is 28 paid holiday days, most employers in the UK give considerably more holidays to their employees. Indeed, “the average UK holiday entitlement including public holidays is 33.5 days – that’s more than a week above the statutory minimum”. Clearly, by outsourcing your transcription needs, you eliminate this cost to your firm.
Changes a Fixed Cost into a Flexible Cost
Many accounting firms recognise that replacing a static fixed cost with a flexible skilled outsourced provider has many positives. If your typing requirements are low, then the costs are low. This also enables upscaling support as the firm grows or in times when workloads are high. Consequently, OutSec can offer support by either acting as a complete, secure, outsourced solution. Or as an overflow, allowing your accounting firm to keep up with the demands of your business.
Business Continuity Planning
In 2020, businesses around the world had their business continuity plans truly put to the test, as Covid-19 swept the globe. Whilst some businesses were forced to close their doors when lockdowns came into effect, OutSec continued to operate as normal. OutSec continued to be able to support our clients and those that needed our help, during this difficult time. As one of our clients stated:
“We are so glad that we have you as it certainly makes it less stressful not having to worry about getting typing completed. I know some firms are struggling if staff cannot get in”.
Using OutSec affords your firm a business continuity solution to enable your business to access typing support, that expands (or contracts) with your firm’s specific needs. You can also use OutSec for upscaling support as the firm grows. This eliminates the need for employing additional typing staff (or indeed, any of the employment costs or risks thereof).
Eliminates the Need for Temporary Staff
As any manager knows, the need for temporary transcriptionists or secretaries can easily fluctuate over time. We know that staff are likely to take the majority of their holiday entitlement in the summer months. Unfortunately, it is harder for firms to predict unexpected illnesses. We can, of course, predict that in the winter months someone may come to work with a cold (and in a matter of days, everyone has come down with it!). This is especially true for those who work in open-plan offices. Environmental factors such as snow, or other extreme weather events, can also result in staff being unable to make it into the office. By using OutSec, you can access typists in times of absence, whether it is through illness or extreme weather, reducing the need for using expensive temporary staff to bridge the gap at a cheaper cost.
Conclusion
Outsourcing isn’t all just about cost savings. It’s also about optimising business processes too. So why not retrain your mind and think ‘outsource’!
About OutSec
OutSec is the UK’s leading online transcription company whose business has grown substantially since 2002. We are one of the most successful transcription companies in the United Kingdom.
OutSec provides secure outsourced transcription services to the medical, legal, property and surveying, universities, media and interviews, advisory boards, conferences & seminars, inventories, financial, corporate, HR, recruitment and Executive Search sectors.
Why is Dictation More Efficient than Typing?
Well, the simple fact is that we can all speak considerably faster than we can physically type:
“The average person types between 38 and 40 words per minute”.
A “good rate of speech ranges between 140 -160 words per minute.”
In other words, dictation is up to four times faster than we can type. Therefore, simply dictating a document is more cost-efficient, giving you more time to dedicate your efforts elsewhere in your business.
Therefore why not add OutSec as a business continuity option for your business? Accounts are free, you pay on a per-minute basis (rounded to the nearest minute) on a pay-as-you-go basis, with no contracts or minimum spend. What do you have to lose? Why not open an account today!
Picture Attribution:
Image by macrovector on Freepik
