Why outsource: the reasons that motivate procurement managers

Why outsource procurement: the reasons that attract business leaders

Business leaders, CEOs, project managers... all may one day be confronted with the question: Why outsource ? For better organization within the company and to achieve better profitability, this strategy can be adopted. Market instability, inflation, tough competition... all this can encourage the company to readjust its activities and find solutions such asoutsourcing. Every day, the staff must find better techniques to improve, boost and develop the company's results as much as possible. To do this, he must know the market, find solutions to better satisfy customers, ensure a better quality/price ratio... He must also face challenges, such as finding niche markets, giving himself time to specialize or sharpen his skills to face current competition. Delegating tasks that you consider to be secondary as much as possible is one of the most effective strategies for doing so. That's where it comes in outsourcing. What does it consist of? Why outsource ?

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Outsourcing or the art of entrusting certain activities to third parties

Every business should have an internal structure made up of a handful of functions spread across multiple departments. However, there are very few companies that are self-sufficient, that is, that have all the human resources necessary for the proper development of their activities.

A business is created on the basis of a specific area on which all the actions carried out are based. It is the core of its activity. For its proper functioning, numerous other activities, particularly administrative, accounting or legal, must also be carried out. However, these take a lot of time and require special skills. This is why, some companies choose outsourcing to save time, but also for other reasons that we will discuss below.

THE outsourcing is therefore the act of entrusting the secondary activities of the company to third parties who are not part of the company. It is also called “outsourcing” in English. All existing secondary functions within the company can be delegated or only a portion of them can be delegated. The tasks that are entrusted to the outsourcing provider are considered to have no added value for the company although they are necessary. The ultimate objective of outsourcing is to enable better internal organization so that all human, material and financial resources can be directed to the company's main activity.

Most often, when a company outsources, it is because it wants to accelerate its development on the market. The transfer of skills to the outsourcing partner must be facilitated so that the outsourcing partner can carry out its tasks in the best possible way.

What types of activities to outsource?

In general, outsourcing is intended for secondary functions, also called support functions, which have no strategic impact on the company. However, depending on its activity, it may also choose to outsource the technical part of its activities. For example, there are start-ups that specialize in digital marketing and decide to outsource the design of their clients' websites. Here are some types of activities that can be outsourced:

- Human resources management

- Payroll and accounting management

- Computer maintenance

- Database management

- The customer support service

- The marketing and sales department

To guide you, here are some questions you can ask yourself in order to better discern what type of activity you need to delegate and outsource:

- What activity takes the longest while it does not directly impact your company's development strategy?

- What activity does not add value to your business?

- What activity is necessary for the development of your business when you do not have the necessary skills to carry it out?

- What activity mobilizes resources that should be used for your core business?

- What activity costs you more if you do it internally rather than outsourcing?

- What activity can possibly lead to a costly restructuring in your company when it can be delegated?

By answering these questions, you will have an overview of your real needs and will have a clear vision of the functions that you can and should outsource.

Why outsourcing?

The decision to opt for outsourcing must be carefully considered and must be the result of a preliminary organizational and financial study. However, once you've got the hang of it, know that there are many benefits you can get from outsourcing some or all of your activities.

1. Being able to focus on your strategy

Multitasking is still a very common practice in companies, especially start-ups and SMEs. However, this practice has a major drawback. It leads to a lack of productivity. Indeed, you cannot focus on several tasks at the same time. In a world that follows a frenzied pace, where competition is increasingly fierce and economic exchanges are going at breakneck speed, you can only adapt and adjust the structure of your business to the situation.

New, more structured and more efficient organizational models must be found in order to be able to keep up with this pace and always position yourself in relation to the needs of the market. However, all of this requires a better focus on the company's core business.

This is why some companies choose to outsource some or all of their activities, even those related to the production chain, to third party providers. They then only keep the research and development department. The latter focuses only on how to develop the products or services offered by the company. Other companies, for their part, choose to keep their production line and outsource secondary tasks such as payroll, human resources, etc.

In addition, outsourcing is an interesting alternative for companies that go through peak periods such as high seasons and that have large numbers of back office needs. In order to avoid a misdistribution of internal resources, it may be more ingenious to proceed with the Outsourcing some ancillary or redundant tasks. With this practice, all teams can focus their efforts on meeting customer needs. Secondary activities continue, but the quality of products or services is not impacted.

2. To be able to save in terms of costs

Before recruiting internally, think about the savings you can make by outsourcing certain activities to third parties. The costs associated with hiring can be considerable: the investment in premium platforms for the search for candidates, the integration and training of candidates so that they adapt to the company, their health insurance, social security contributions, etc. Not to mention the expenses associated with the purchase of equipment and materials.

Sometimes there are situations where the company is forced to move due to lack of space. This is an additional cost. However, if you entrust all this to an external service provider, you not only save energy, but also expenses. In the long term, the company reduces its payroll, but also its investments. In addition, the outsourcing service is quite flexible in terms of cost. The outsourcing provider often charges for its services according to the needs of the business.

3. To improve quality

The service providers to whom you entrust your tasks to be outsourced are specialists in their field. This is their core business and there is no doubt that they will provide you with quality services. This can only be beneficial for you, because not only will they take care of these tasks and free up your free time. But they will also bring innovation and freshness to their methodology. For you, it is the guarantee of more performance in your business.

In addition, your company will receive highly specialized services and will also increase its know-how. Even if you are not supposed to focus your efforts on the tasks assigned to the external provider, the external provider will probably inform you about their methodology and the process they follow. In some cases, your team members need to get trained to better adapt to the new process. All of this means that new skills and experiences will enrich your business.

4. For greater flexibility

Thanks to outsourcing, your business will gain flexibility, whether in terms of operations or needs. Indeed, when you subcontract, you are freeing yourself from the rigor of certain rules and standards governing the outsourced activity in question.

External service providers are professionals who have experience and who know very well the rules to follow in their field of work. They will know how to adapt to your needs, manage competitiveness, optimize their services so that you can focus quietly on your main activity.

In addition, the outsourcing of services can be perfectly customized. This allows you to gain flexibility in relation to your needs. You can only subcontract during certain periods of time. It can be punctual or constant. In addition, it is possible to work with different collaborators at the same time, although it is not very recommended. However, knowing that there are many outsourcing providers allows you to put things into perspective and not stress too much about achieving your goals.

5. To maintain constant operational control

In a world where economic instability is increasing, every company must implement actions that will avoid the constant restructuring of the internal organization. It may happen that departments need to be remodelled according to the economic situation. However, this may result in additional costs. By using external subcontracting, you ensure the continuity of your company's activities without having to carry out an internal restructuring, while having the guarantee of a quality workforce.

6. To save time in operations

Why outsource? One of the main reasons for outsourcing is to save time to focus on your core business by no longer being forced to take on outsourced tasks. As these are entrusted to professionals in the field, operations will be carried out more quickly. For your part, you will also be able to go faster while having control of the management of your business. You will even have the option of reducing the deadline at all levels for faster results.

7. For better management of internal human resources

Human resources are among the most important resources in a company. Outsourcing makes it possible to better manage the human potential of your company by letting each person develop in their own field. For SMEs and start-ups, it is sometimes better to limit yourself to a few employees internally rather than managing hundreds and having a poorly structured organization. The solution in this case is to outsource secondary activities and to keep only the majority of employees and skills in the company.

Successful outsourcing: a challenge for every company

Now that you know why to outsource or use external subcontracting, it is time to know how to succeed in this process, especially if this is the first time you are doing it.

Anticipating needs

Anticipation is the key to your success in outsourcing. Once you've decided to outsource, don't wait for it to be a total rush in your business to find a trustworthy outsourcing provider and that can meet your needs. Call for tenders and get the whole process in place well before the storm hits.

Choosing the right activities to outsource

The choice of activities to be outsourced must be carefully considered. Above, we have already listed questions that allow you to choose them carefully. Only delegate activities that take up too much of your time and that can slow you down in your progress. Likewise, be careful not to outsource strategic tasks that are the basis for the development of your business.

Take care of the specifications

Don't forget to write the terms of reference if you want the collaboration to go well. This document is crucial, as it will serve as a reference for monitoring outsourced tasks. It must be followed to the letter.

Choosing the right provider

Numerous outsourcing providers exist on the market. Choosing the one you can work with for the long term can be difficult. The selection will take time. However, it is an investment that should not be overlooked if you want to recruit the best service provider. So take the time to compare and closely see the reputation, specialties and costs of the services offered by each provider. The outsourcing rate is not the only criterion for choice. The quality of the service is the main element you need to consider.

Do not overlook collaborative tools

Generally, outsourcing providers provide you with various online tools or software to better communicate with you, but also to monitor outsourced tasks. However, it may also be interesting to set up your own system by using online collaborative tools, whether for organizing files or for communication.

Communicate regularly with your collaborator

Communication is the basis for the success of any collaborative work. Organize physical or virtual meetings on a regular basis. The most important thing is to talk to your collaborator as often as possible. The aim is to take stock of the progress of the project, the possible problems that your service provider may have encountered, the possible problem with the deadline etc. Communicating on a regular basis avoids unsaid words and misunderstandings that could be prejudicial to the success of the project.

Writing the outsourcing contract well

The outsourcing contract is a very important document in a short or long term collaboration. The drafting stage should therefore not be overlooked. This document guarantees greater legal certainty for both parties. Here's what should contain An outsourcing contract.

- The subject of the contract mentioning the mission that is entrusted to the service provider

- The cost of the service

- A renegotiation clause allowing the conditions in the contract to be renegotiated in the event of a change in situation.

- The delivery time as well as that of payment. Penalties must also be included in the event that these deadlines are not respected.

- Confidentiality clauses for information provided to the service provider

- Intellectual property clauses

- The competent court in the event of a dispute.

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Why entrust your procurement outsourcing to BME?

Are you a business manager or a purchasing manager in a company? BME (Buy Made Easy) offers you its services in outsourcing class C procurement in order to facilitate your operations from the order to the delivery. There are many benefits you can get by choosing to outsource this part of your activities to BME.

Reasons for outsourcing at BME ?

- Class C purchases are purchases that are also called “wild” or “spots”. These are acquisitions that do not have much value and cannot be counted among the classic orders. As a result, their implementation takes up a lot of time, even though it is not necessarily a task with high added value. By entrusting BME with the outsourcing of these types of purchases, you save time and can devote yourself entirely to the core of your business.

- BME takes care of all the steps to be taken to succeed in these purchases, including the choice of supplier, order management, payment and invoicing. You won't have to deal with this whole process anymore.

- Your direct and indirect purchases are optimized thanks to the fact that BME automates the purchasing processes. The management of these is centralized, which facilitates operations for better results. Therefore, it is possible to negotiate prices according to the volume ordered.

- Our 100% dematerialized ePurchase solution allows better management of transactions and delivery. Thanks to it, everything is done transparently and you can even calculate the savings you will have generated. This is why outsourcing to BME remains a strategic option to boost your performance.