A look at the impact of outsourcing — part 2

If you think outsourcing will never impact your business, you’re essentially sticking your head in the sand.

Outsourcing can potentially help your business, harm it, or both. You need to be informed so that you can benefit from using it, or protect yourself by creating strategies to compete against it.

Outsourcing is a double-edged sword for the small business owner. On the positive side, resources are available locally, nationally and internationally that can help you control costs while getting more accomplished. Many services are available at competitive rates for those who can’t afford or don’t want to hire someone in-house.

The flip side is you may be facing stiff competition from outsourcers worldwide who undercut your prices, or your competitor down the street may be slashing his operating costs by outsourcing. These threats are magnified in a tough economy when people want to spend less money. You need to be aware of the types of things being outsourced and create your competitive strategy accordingly.

Outsourcing is nothing new. You already outsource work whenever you hire an accountant to prepare your income tax returns, use an attorney to draft a legal document, or contract with an outside payroll firm. But pretty much anything that doesn’t require someone being on-site can be outsourced.

You can outsource advertising, database development, direct mail, lead generation, telemarketing, search engine optimization, research, surveys, and marketing plans. Then there’s accounting and bookkeeping, budgets and forecasts, financial reporting, process improvement, real estate management, and Excel work. Data entry, research, transcription, mailing lists, calling, and other administrative tasks can also be outsourced.

If you need creative help, you can outsource voice recording, audio/video work, graphic design, logos, illustration, web design, flash animation and programming. Some legal work can be outsourced, such as patents, copyrights, trademarks, contracts, corporate documents, wills, and trusts. And you can outsource article writing, web content, e-books and blogs, translation and editing. The list is endless.

If you’re in one of these industries, you may need to reinvent yourself to remain competitive. Look for things you could provide to add value and differentiate yourself — hopefully, that could not be easily outsourced. Whatever you do, don’t fool yourself into thinking you’re immune just because you’re a professional with a specialty. A retired intellectual property attorney living in a rural area might be perfectly happy to work part-time and charge a hundred dollars an hour for his services. You need to find a way to compete against him.

Now let’s discuss how you might try outsourcing in your own business. Websites like Elance.com, Guru.com or Odesk.com let you post projects and receive competitive bids. We’ve used Elance many times, with great results. It shows a candidate’s location and qualifications, and allows you to release payment incrementally to ensure your satisfaction.

We’ve also helped clients post outsourcing projects. One memorable example was a retailer who contemplated consolidating two of his locations and wanted to understand shopper demographics at each store. The outsourcer was given thousands of lines of raw data (we removed names and other confidential information), which he entered and categorized in an Excel spreadsheet. He charged less than hundred dollars and the information was immensely helpful to our client.

To try it yourself, start by looking at your business to see what might be needed. Are there areas where you lack expertise or things you haven’t had time to do? You might have a “someday” list or backlog but not want to hire another employee. Once you decide on your projects, set a budget. We recommend starting with something small so you can test the process.

Review outsourcing websites to find one that appeals to you and post your projects for bidding. These websites take safety precautions but avoid posting information you would prefer to keep private. You will probably be surprised at how many bids you receive, the bidders’ qualifications, and the prices they offer.

When it comes to outsourcing, we admittedly straddle the fence. We’ve used it with great results but also recognize the potential threats to business owners, ourselves included. Being informed is your best protection, whether you choose to take advantage of the opportunities outsourcing affords or simply want to create strategies to stay competitive.

Laddie and Judy Blaskowski are partners in BusinessTruths Consulting, Inc.