What is outsourcing
Outsourcing is hardly a new kid on the block. Recognised as a legitimate business strategy in the late 1980s, its prominence rose throughout the 90s, gaining as many advocates as it attracted critics. At its most extreme, the practice saw large financial institutions, on a mission to cut costs and maximise shareholders’ profits, offshoring huge parts of their operations to faraway lands, where the clash of cultures often than not resulted in less than perfect customer experience.
In its purest form, outsourcing is nothing more than a strategy of contracting out some of the services that would be traditionally carried out in-house with the aim of cutting costs and improving the overall business efficiency, focussing our own and our staff’s energy on those activities which add the most value to our clients.
Why you are already doing it
As small business owners, we already outsource. Even if we don’t realise that we do. How many of us use an accountant to take care of our bookkeeping and tax returns, or pay a monthly subscription for an accounting software that magically reconciles bank statements, allows us to log our expenses on the go and, at a push of a button, produces fancy graphs covering just about any aspect of our business? Theoretically, we could do it ourselves. It’s not rocket science, right? Give me a spreadsheet and access to Mr Google, and I’ll do my taxes and even throw in a few of these fancy charts. Oh, and also give me a week or two.
Why you should do more of it
Time, or lack of it, is why we choose, more often than not, to pay somebody else to do things they can and will do better, cheaper and quicker. In exchange, we can use the time we reclaim to do things we’re better at, that we enjoy more and where we can genuinely add value to our clients and our business.
The same logic applies when you buy a back office software instead of using an excel spreadsheet (or fifty), decide to use a range of third-party managed portfolios and a panel of DFMs instead of running model portfolios in-house, or when you hire a compliance firm to help you with file reviews, FCA returns and managing your business through (constant) changes in regulation.
Technically, we’re all more than capable of doing all these things ourselves; we may even enjoy some of them. Whether it makes good business sense, however, is another question, which only you can answer.