Outsourcing: maximise the benefits, avoid the potential pitfalls

Part 1: the benefits of business outsourcing

Paperclip’s business model is founded on outsourcing.

Commercially, we depend on organisations – private, public, charity, not-for-profit – making the decision to outsource some or all of their reception and administrative requirements to Paperclip.

Operationally, Paperclip outsources all non-core business activities: accounts, payroll, IT support, phone systems support, HR, recruitment, marketing and more.

So what are the benefits of outsourcing, and what do you need to do to make sure it works effectively for your business?

Focus on core activities

When Paperclip first opened in 2008, outsourcing was a necessity. Human and financial resources were extremely limited: me and my overdraft! Consequently, all products and services had to be sourced externally. As Paperclip grew, outsourcing gave me the time and space to focus on the core activities of delivering professional, tailored and affordable call-answering and administrative support services. Effectively, I outsourced the worry and stress of accounts, payroll and IT to specialists.

Reducing fixed costs; variabilisation of costs

All business owners focus on – or should focus on – overheads; those costs related to the day-to-day running of the business rather than the delivery of core services. One of the reasons I outsource is to reduce my fixed overhead costs. Put another way, outsourcing turns many fixed costs into variable or semi-variable costs.

If you choose to use Paperclip to deliver call answering services or provide administrative support, the pricing model is a mixture of a small fixed cost element (monthly maintenance charge) and a variable element (the minutes you use). Many IT support providers and professional services companies operate in a similar way.

I also like the fact that outsourcing provides me with a high degree of cost certainty for budgeting purposes.

Expertise

After fifteen years in business, I can read a balance sheet, generate marketing ideas, understand the key aspects of employment law and more. However, I am not an expert in any of these fields. Outsourcing gives me the ability to call upon specialists whose job it is to be on top of the latest developments in their areas of expertise.

In some areas of business – IT and SEO (Search Engine Optimisation) for example – I am almost completely in the dark and rely on my outsourced experts to light the way!

Speed

If you take a look at your ‘inbox’ today, you will have a huge list of important tasks to complete. In fact, the list is probably so long that you never get down those tasks towards the bottom. I am exactly the same!

Outsourcing enables me to allocate many of the tasks on my list to third parties. The SLAs (Service Level Agreements) agreed with these suppliers mean the tasks are completed far more quickly than if I did it myself or allocated them to a colleague. I really value this speed and the advantage it gives me in business.

Flexibility and agility; scale at short notice

Paperclip has grown steadily over the fifteen years it has been operating. This growth has not, however, been a neat straight-line growth (it would have been much easier to manage if it had been!). There have been tremendous growth spurts and periods where the business has flat-lined. Outsourcing has made dealing with these variations in business activity far more straightforward.

Business Outsourcing means you don’t have to recruit!

Paperclip uses both in-house resources and recruitment agencies to recruit new members for the Paperclip call-handling team. Despite our experience in this area, it remains a challenge, to identify, interview, recruit, train and retain talent in this very specific area. It also absorbs a significant proportion of management time and focus.

Outsourcing means I have just one recruitment challenge to address.

Other benefits of outsourcing

There are many other benefits attributed to outsourcing that may be more relevant to businesses operating in different markets from Paperclip. For completeness, I have listed some of these below:

• Reduction in ongoing investment in internal infrastructure
• Sharing of risk
• Access to innovation
• Release capital for investment

 

Part 2 – How to ensure outsourcing works for your business

Articles on outsourcing rightly point to the potential pitfalls of the approach if it is not implemented effectively. Such pitfalls could include concerns regarding losing control of an aspect of your business; a fear of being locked into long-term contracts; confidentiality and security; cost; reaction of customers; and, communications.

Stability

When I look to outsource at Paperclip, I look for suppliers that have a stable track record. Ideally, this would be supported by testimonials from associates whose opinion I value, or from owners of businesses similar in size and activity to Paperclip.

Control

I don’t outsource any of Paperclip’s core activities. Consequently, I don’t fear loss of control. In fact, having built strong long-term relationships with key suppliers I feel I have more control as I know they are looking out for Paperclip’s best interests.

Contracts

Paperclip’s contractual arrangements for telephone answering clients are based on rolling monthly contracts. We retain clients through the quality of the service we provide. It is a relationship based on trust.

I am equally wary of long-term contracts when looking to outsource services for Paperclip. Once a supplier has proved themselves, I am a loyal customer. Paperclip has the same accountant and IT-support provider since the day it started.

Quality

Service performance, quality and reliability are key for me when looking to appoint an outsourced service provider. This is particularly true when the service provided could impact on Paperclip’s ability to deliver its core services. Paperclip’s phone system is integral to the services we deliver and, consequently, we have tight SLAs in terms of response times from the organisation that provides telecomms technical support.

This philosophy is also reflected in the KPIs and SLAs Paperclip provides for its clients.

Confidentiality

Confidentiality and data security are absolutely fundamental to the way Paperclip operates. Paperclip, for example, has clients in the medical, legal, and financial sectors where client confidentiality is essential. All Paperclip employees sign a confidentiality and non-disclosure agreement, and this also forms a key aspect of Paperclip’s induction training.

Costs

The Paperclip approach to pricing is transparent. It is featured in our Services Guide 2023, and underpins the ‘Quotations Generator’ on the Paperclip website. I expect outsourcing partners to be equally transparent with their pricing structures. The key message here is ‘no surprises’! There also needs to be an understanding of how the supplier deals with changes to prices, including notice period before changes are implemented.

Customers

One of the Paperclip mantras is: ‘When we answer your call, we are part of your team.’ When we onboard a new client, we agree on the greeting to be used when answering a call, and the way a call should be handled. Screen popping technology means our team know, when they answer a call, that it is for your organisation and answers accordingly. The caller remains unaware that they are talking to Paperclip.

Some Paperclip customers actively promote the fact that they use a call-answering service. A Family Law client emphasizes the fact that all calls are answered within four rings, and uses this as a competitive differentiator.

When I am ‘the customer’, for example when ordering online, all I care about is the service I receive. For example, when I order a product online, I don’t worry that the supplier is using Evri or a.n.other third party to deliver the package; I’m not concerned that my live chat queries are handled by a third party (hopefully, Paperclip!); all I want is my product, delivered in good time, and in good condition.

Communications

Communications have to be right for outsourcing to work effectively; they are an integral element of the intangible ‘trust’ factor. When I need HR advice, or when I have a management accounts question, I want to receive a prompt answer. Voicemail or unanswered calls are unacceptable; both are a clear sign that an organisation requires call answering.

If you struggle with an outsourcing partner’s communications, then I think it’s time to consider a switch.

As you may have gathered from this article, I am an advo

It is never ‘outsource and forget’

I am an advocate for outsourcing non-core services. I am not blind, however, to the potential pitfalls of outsourcing. It is never a question of ‘outsourcing and forgetting’; all outsourcing relationships require a degree of management time. It is also important to remember that effective outsourcing, like any successful partnership, is a two-way relationship. Trust works both ways.

You may also like:

• The psychology of call answering: the importance of being heard
• Paperclip exists to serve organisations that believe in customer service
• Paperclip: adding value by interfacing in real time with clients’ cloud-based management systems
• What sets Paperclip apart from the competition?