3 Rules for when to outsource your Business Processes
3 Times you should keep it in-house
Are you outsourcing strategically? If you’re not, you might want reconsider the importance of outsourcing… Take it from Harvard:
"Today, outsourcing is not just a trend; it is an integral part of how smart companies do business….The concept has matured. It now connotes a strategic relationship between partners, with shared risks and goals – a relationship in which a company concentrates on its core business and relies on outsourcing partnerships to get the rest done. Unless managers periodically reexamine how they make sourcing decisions – and how resources get allocated – they can find themselves… starving what is core".
- Harvard Business Review
With the importance of outsourcing in mind, here’s a simple framework that can help you decide which business processes to keep in house and which ones to outsource.
When to outsource:
- It’s not your core business
- Someone else can do it better
- Costs less to outsource
When to keep it in-house:
- It’s your core business
- You can do it better
- Costs less in-house
These simple rules are not comprehensive, but a rough guide to start the discussion. We believe that you should spend at least one day per year looking at how you are spending your resources and determining if there’s a better way.
When you have the discussion about what to keep in-house vs. outsourced, you might also want to consider these words from a business legend:
"Don’t own a cafeteria: Let a food company do it. Don’t run a print shop: Let a printing company do that. It’s understanding where your real value added is and putting your best people and resources behind that.Back rooms by definition will never be able to attract your best. We converted ours into someone else’s front room and insisted on their best. This is what outsourcing is all about."
- Jack Welch, former CEO, General Electric “Jack: Straight From the Gut”
Over the last year, we’ve noticed healthcare staffing companies looking for ways to improve services, and reduce costs. Some have achieved these results by outsourcing simple business processes, while others by bringing services back in-house. Here are a few examples:
- Website development: An in-house service for some, but mostly outsourced for cost savings and improved expertise.
- Cleaning services: Much cheaper and more effective than managing your own cleaning team.
- Housing: Can offer savings, and if you find the right partner improve quality control.
- 24/7 phone support: Offers big savings outsourced, but quality control can be an issue
- Staffing / recruiting (it is your core after all): Always in-house
- Sales: Almost always in-house, but call centers or sales campaigns are occasionally outsourced.
- Housing: This made the in-house and outsourced list because we often see both. Some companies are shifting to a hybrid model where their housing department partners with a housing provider to improve services and reduce costs.
- Marketing: Mostly in-house, though advertising and design work is often outsourced.
In full disclosure the company I work for offers temporary housing services, but I can tell you that even as a business process outsourcing provider, we spend time asking each other challenging questions. Question like, "Is this our core business?", "Can someone do this for less?", and we make each decision strategically.
Guest Blog Post by: David Folwell, CMO at Travelers Haven, a company that provides temporary housing to the healthcare staffing industry.