Businesses know they need to stick with the things they’re really good at, which may be why security is one of the rising areas of IT outsourcing.
The latest report from market research firm Computer Economics showed that nearly 8 percent of technology budgets in large enterprises are being directed to IT outsourcing firms. While a lot of the work providers are doing involves managing cloud and software-as-a-service (SaaS) products, security was singled out among the competencies where corporations believe working with a third-party vendor will benefit their ability to serve customers.
This may be just good common sense. Obviously, there is more time and talent that can be devoted to supporting products and services when in-house staff aren’t busy trying to identify and fend off the latest cyberattack.
SC Magazine noted that other drivers for IT outsourcing include a desire to be more flexible as an organization, to do new things or to reduce spending in certain areas. Of course, most organizations cannot afford not to invest in security, but the report suggested they are constantly evaluating their options as business and market conditions — which includes security risks — change.
In fact, The Data Center Journal pointed out that 92 percent of companies find the costs of handing over things like disaster recovery are often the same as doing the same work themselves. The objective, however, is to make sure business isn’t disrupted and customers aren’t negatively impacted in the event of a distributed denial-of-service (DDoS) attack, network outage or other security breach. The Computer Economics research suggested that companies are showing more confidence in this area of IT outsourcing because the providers of such services have established a strong track record over the last few years.
Beyond pure IT outsourcing, managed security services are also expected to grow considerably over the next five years. IFSEC Global reported that cloud-based security services in particular would eventually account for a larger share of the overall market than those who provide the same services on a customer’s own premises. Either way, it looks as though the increasing challenge of keeping up with security threats and mitigating the worst risks is leading more organizations to conclude they just can’t do it alone.
Organisations are starting to use agile principles to reinvent the outsourcing selection process, with some excellent results
Outsourcing IT is a $300bn industry – and yet studies show that up to 25% of clients are dissatisfied with their suppliers. This is partly because selecting a supplier is a bit like choosing a marriage partner without the benefit of dating.
Consider, for a moment, the traditional contracting process. Clients issue an RFP. Multiple suppliers submit written proposals that, in some cases, exceed 1,000 pages, often cut and pasted from previous proposals, without really knowing the client’s unique business needs. The client inserts detailed service descriptions, performance indicators, penalties and other tools designed to keep the supplier on time and under budget.
At the end of the RFP process, both the contracting company and the supplier are often locked into a multi-year relationship. And if the supplier overpromises and underdelivers, the laborious contracting process begins all over again. Along the way, the valuable time, energy and goodwill of team members has been sapped.
But it doesn’t have to be this way.
A handful of companies have begun using agile principles to reinvent the outsourcing selection process – with excellent results. The Agile Manifesto, originally designed for software development, encourages collaborative, cross-disciplinary teams to move rapidly, prioritise working services over exhaustive documentation, and maintain flexibility to change.
By adopting these principles, companies have an opportunity to extract much-needed value from an otherwise costly and time-consuming endeavour. These agile principles include:
Individuals and interactions over processes and tools. IT is not just a commodity – it is a people business. When outsourcing, more than half of the client’s investment goes toward staffing. Rather than issuing an exhaustive RFP, the client issues a short brief (no more than 10-20 pages) that prioritises key objectives and deal-breakers, and articulates what really matters to the business. This serves as a starting point for discussions.
Working services over comprehensive statement of work. The client holds in-person, iterative workshops with suppliers – in short cycles – to articulate high-level business needs and jointly explore potential solutions. These meetings are held as much as possible with suppliers’ operational teams, not the sales force.
Customer collaboration over contract negotiation. Based on a series of brief workshop discussions (no more than two hours each), the client whittles down the field until they find the best match. This typically takes weeks, rather than months. The workshop discussions cultivate a focus on business-oriented challenges and build co-ownership over solutions, so the roadmap is “ours”, not “theirs”.
Responding to change over following a plan. By focusing on business-oriented objectives and how best to achieve them – rather than cookie-cutter solutions – the client and supplier can better adapt to change and take advantage of new opportunities that arise in the business.
This agile approach to IT sourcing is still quite new, but we have seen clients achieve tangible results.
A European telecommunications company used agile principles to negotiate an ambitious outsourcing deal for application management. Instead of spending precious hours reviewing mammoth proposals and speaking with pre-sales teams (who tend to overpromise), the client held in-depth discussions with the operational teams of the short-listed suppliers.
These discussions included a cross-disciplinary team from finance, HR, IT and other units, and by the end of the process, the entire IT management team – not just the CIO and CFO – had bought into the solution. This early buy-in created alignment, which is a key ingredient for success.
Likewise, an insurance company used agile to transform its IT delivery. Instead of researching various solutions in the market and issuing an RFI, it invited 16 suppliers to an afternoon of “speed dating”. By the end of the day, the client had whittled the candidates down to six.
After two weeks of supplier workshops, the client had enough information to select two finalists. It issued an RFP and this was also conducted in the agile sourcing manner. By holding frequent, in-person workshops with these two suppliers, the time required to close the contract was reduced dramatically (by 30%). The discussions also avoided a wealth of unnecessary documentation and focused the team’s attention on the most relevant issues that affected the business.
While agile sourcing can deliver better, stronger and faster solutions, it is not a silver bullet for all scenarios. In situations where quality of service is relatively similar across the board, as with standard telecom contracts, the agile approach is likely to be overkill.
Similarly, agile sourcing is rarely applicable for procurement within the public sector due to this sector’s unique purchasing constraints, including rules that may forbid face-to-face negotiation. However, in scenarios where the IT solution is unclear, highly customised or complex, then agile can lead to more innovative, fit-for-purpose results.
To succeed with agile sourcing, companies need to prepare in the following ways:
Establish multi-disciplinary teams. Agile sourcing requires intense participation from people across multiple units (various parts of the IT organisation, HR, finance, procurement, legal, and so on).
Ensure alignment between teams. Given the speed of discussions, it is important to have explicit alignment across teams. We recommend meeting at least twice a week to ensure everyone is pulling in the same direction.
Prepare for faster decision-making. To keep the selection process moving, senior management must be prepared to meet often and make decisions quickly. For many of our clients, this can become the biggest bottleneck.
Document key agreements. While the agile approach does not require massive amounts of detailed documentation, it is critical to document the agreement in a contract. This can be done between workshops to save time and avoid surprises during the contracting phase.
Outsourcing has the potential to bring significant new capabilities into an organisation and drive innovation, but too often it falls short of these lofty ambitions. Applying agile principles to the outsourcing process can dramatically improve outcomes. It enables clients to focus on what really matters for the business, significantly reduces the amount of time spent negotiating with suppliers, and leads to more flexible, resilient contracts.
Spending on the outsourcing of IT functions is rising at a rate that is in step with IT operational budgets as a whole, according to a new report, “IT Outsourcing Statistics 2015/16,” from IT research firm Computer Economics.
Enterprises may choose to contract with a service provider in order to preserve capital, reduce costs, improve operational flexibility, increase service levels, reduce management overhead or rapidly deploy new capabilities, the study found.
“Outsourcing enables an organization to augment in-house capabilities without making long-term commitments or large capital investments,” the study said, based on a survey of 132 IT organizations in the U.S. and Canada. The onus falls on IT executives who need to “continually evaluate the potential of outsourcing to help meet their tactical and strategic objectives.”
Perhaps unsurprisingly, it is large organizations – those with IT operating budgets of $20 million or greater – that are leading the trend, spending 7.8 percent of their IT budgets on outsourcing, the study showed. Most of the migration to third-party providers is done for help desk and web/e-commerce operations.
Outsourcing of disaster recovery and desktop support are the IT functions with the greatest potential for successfully reducing costs, and the outsourcing of web/e-commerce operations and IT security are the functions found to have the greatest potential for improving service, the study found.
Another trend the study identified is a rapid growth of SaaS, as evidenced by findings that 65 percent of organizations outsource application hosting. This is the most frequently outsourced function in the study, with organizations reporting that they plan to increase the amount of work they outsource
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Being an entrepreneur means there’s always more work to do, and not enough time to do it. That’s why the most successful business owners delegate certain tasks to freelance contractors who specialize in providing valuable time-saving services for a fee.
In today’s Internet-fueled service economy, it’s easier and more convenient than ever to hire people to perform fee-for-service jobs on a one-time or ongoing basis. Here are five jobs you should consider outsourcing to experts, and some resources for finding qualified professionals.
1. Accounting and taxes.
Frankly, no successful business owner should have to do his or her own taxes. It gets more complicated and time-consuming staying on top of your expenses the bigger your business becomes. Hire a reputable person to keep your books in order, help you grow your business, and give you sage advice. A Certified Professional Accountant (CPA) will organize your finances and help you figure out what parts of your business bring in the most and least income. Word-of-mouth is always the best way to find a qualified CPA or you can contact your state accounting society.
Related: How to Build a Better Business with Outsourcing
2. Writing and social media.
When you need website verbiage, high-quality blog posts, newsletter articles, marketing materials (like brochures and ad copy), case studies or whitepaper reports, a professional writer can produce it for you. Many writers can also provide content for your social media profiles to get your message out through Facebook, Twitter, LinkedIn and other sites. This guide to hiring freelance writers explains your main options.
3. Graphic design and web development.
Whether you want a more attractive website, a brand-defining logo or eye-catching print materials, a professional graphic designer will help your business look its best. Whatever your goals, there’s a graphic designer with the talent, aesthetic sensibilities, and visual skills to fulfill your vision and enhance your company brand. Many also offer web development, which will make your website function technically. Check out this basic guide to hiring freelance graphic designers and web developers.
Related: These 25 Successful Startups Were Built With Outsourced Development
4. Administrative assistance.
If you dread sifting through your overflowing email inbox every day, a virtual administrative assistant (VA) may be just what you need to streamline that frustrating process and keep you from being inundated by a constant stream of messages. In addition to consolidating and prioritizing your correspondence, VAs can do other secretarial and clerical tasks such as scheduling appointments and making travel plans. You can find a qualified VA who’ll save you time and help you stay organized at the International Virtual Assistants Association (IVAA) or upwork.com.
5. Web research.
Prospecting for new business and keeping up with the latest developments in your industry can be time consuming and daunting. A web researcher can research information you, whether it’s gathering information and statistics for an upcoming presentation or looking up the names of companies and contacts for a leads list. They can also organize this material in a form that’s easy to use and read. You can find a plethora of web researchers at elance.com.
Before you waste your time on another project, consider hiring freelance contractors to take care of both routine and higher-level business tasks. This will make your to-do list shorter and free you up to focus on the things you’re best at and that generate the most income for your business.
How to do the difficult work of harnessing human nature for outsourcing success
In one of my last post, I reflected on the fact that an outsourcing relationship, at its core, is a human relationship. Remembering this is critical to success. But, in addition to being “nice,” there is a lot more companies must do to make the most of their service provider relationships. My contention is that enterprise buyers unlock the most value by understanding the complex human dynamics that happen when two organizations come together to improve service delivery.
Here are seven ideas to help get you started:
1. Pick the right people to manage the service provider relationship. Ask yourself if you would put them in charge of a customer relationship. No? Next!
2. Force yourself to provide positive feedback. The individuals assigned to your account are human, and they want to please you. Study after study shows that nothing works better than positive reinforcement. I know this runs counter to what we believe about hardcore business: why should I praise someone for doing what I am paying them to do anyway? Trust me. It works — in part because service providers aren’t always sure they are doing it right. A little positive feedback not only can bolster the relationship, it can prevent unnecessary over-engineering when they “fix” something that wasn’t broken in the first place.
3. Change your mindset. You are not managing a provider. You are brokering demand and supply of a business service. This perspective will give you a more valuable role to play for your company and will make you happier at work. You are managing an outcome, yes, but you are also managing the bench for your future leadership. You don’t want to convince them they never want to work for you directly.
4. Adapt. Process discipline is healthy until it becomes dogmatic. Your service provider serves hundreds of other clients. Be open to their suggestions. Also be ready to propose improvements that fit your specific needs.
5. Be kind and well-mannered. You’d be surprised at the difference it can make.
6. Be tough. Being kind is not the same as being easy. You can and should be a demanding client — not just because you are paying for a service, but because people on your outsourced team appreciate learning just as much as you do. Progress will come if you can be both demanding and kind. They are not mutually exclusive! Need inspiration? Think of a parent, boss, coach, sibling or teacher who pushed you to do your best.
The Future of Convergence Is Now: Are You Ready?
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The Future of Convergence Is Now: Are You Ready?
IT leaders are facing a huge challenge: a pressing need to increase infrastructure agility in order to…
7. Watch this video. It will take 10 minutes of your time, and it will change your managerial life. Clients and service providers alike have created such a rigid environment, we should not be surprised that career satisfaction is so low. Dan Pink explains clearly and humorously why everything we’ve been taught about managing teams of professionals is probably wrong, and how we can start motivating them to be great again.
Despite the fact these behaviors have nothing to do with technical or functional know-how, they can make or break an outsourcing relationship. It may be a counter-intuitive approach, but it is a human solution to a fundamentally human problem.
Companies are increasingly farming out functions such as IT security and application hosting, according to a report from analyst firm Computer Economics.
The company interviewed over 130 companies in North America for its report, IT Outsourcing Statistics 2015/16, asking them about their outsourcing practices. Overall, it found that outsourcing is keeping pace with a rising overall IT operating budget.
Median IT budgets rose 3% in the last year, and outsourcing continued to account for a tenth of that money overall. Large companies continue to be the leaders in outsourcing, spending a median average of 7.8% of their IT budgets on it. This compares to 6.7% for mid-range companies and 3.7% for small firms.
Under the covers, though, the functions being outsourced are changing. IT security outsourcing is increasing, as are web/ecommerce systems and application hosting, according to Computer Economics.
Application hosting is the most popular function to outsource, with 62% of organisations doing it, and two thirds expecting to do more so in the future. The rise of SaaS is a big contributor to application hosting, the report suggested.
Not all IT functions are being outsourced at the same rate. Datacenters and database administration are all flat, as is application development.
The percentage of work application development work farmed out by companies is typically low, and often project-based, the report suggested. The median average of a firm’s total application development work that it will farm out is around a fifth.
Customers just aren’t that happy with the service from application outsourcing providers. A third of those who outsource application development found the service worse than doing it in-house, while 42% found it the same.
Cost certainly isn’t a driver either. Fewer than one in five organizations who outsource application development work (17%) save money on it. In fact, 58% of them find it costing more.
The outsourcing of network operations and disaster recovery is also flat. That’s odd, because disaster recovery is one of the IT functions that the report says has the biggest potential for reducing costs through outsourcing. Another is desktop support.
Expect to see outsourcing increasing gradually over time, concluded the firm, as the adoption of cloud computing continues.
One reason for the general health of IT outsourcing could also be that it’s simply too difficult to find the staff. Canadian firms have resorted to temporary workers to fill the IT talent gap.
Some companies have also been found replacing Canadian workers with foreign ones in a bid to cut costs, sparking outrage. In 2013, RBC was found to have bought in IT workers from India via outsourcing company IGATE. The firms had been working together since 2005, it was revealed.
Since then, the Canadian Government has clamped down on workers entering the country under its Temporary Foreign Worker program. Perhaps this could also fuel the growth of outsourcing contracts over the next few years?
Computer Economics looked at 132 north American organizations with at least $50m in annual revenues, or $2m in IT operational spending.
Dutch hospital Zaans Medical Center has outsourced its IT to French ICT services provider Atos, making it the first such facility in the Netherlands to completely outsource its IT infrastructure. Atos is responsible for managing workstations, servers, network, storage, back-up facilities, service desk and service-integration of the hospital located in Zaandam. ZMC is outsourcing many functions ahead of a move into a new hospital from the end of 2016. Atos, which expects more Dutch hospitals to take the same route, has developed a proof of concept in cooperation with Dell to demonstrate its offer.
Fewer organizations are outsourcing learning. But those that do are by and large satisfied with the products and services they receive.
Effective learning programs transfer knowledge and skills to employees, customers and partners; help retain employees; and ultimately improve speed to proficiency for everyone. However, how organizations choose to deliver learning can vary.
In many organizations, programs are developed in-house. Some outsource learning, and others leverage a combination of in-house development options and external expertise. The decision to outsource is often made based on the volume of learning required and the quality of learning internal staff can support.
In 2014 Chief Learning Officermagazine’s Business Intelligence Board found the number of enterprises outsourcing learning didn’t change much over the prior year. That trend changed in 2015. Organizations spent about 24 percent of their budgets on outsourced activities, down from about 30 percent during the past couple of years.
Every other month, IDC surveys the board on a variety of topics to measure the attitudes, issues and interests of senior training executives. Recent findings and interpretations are relevant to companies who outsource or are considering outsourcing.
Learning outsourcing is typically defined in research as the ongoing transfer of management and execution of one or more complete learning processes to an external services provider. However, survey results have consistently shown this is not the use of the term in the marketplace. The types of learning activities purchased suggest enterprises use the term learning outsourcing synonymously with any use of external learning providers. The analysis presented here will adopt this broader usage of learning outsourcing.
A Slow Decline
For the past several years, the number enterprises that outsource part of their learning function has had small variations: up in 2007, down in 2009, up in 2011, etc. While up in 2014, in the 2015 survey the erratic trend appears to continue with about 53 percent of enterprises reporting they outsourced some portion of their training function for the past two years (Figure 1).
The challenging economy drove a portion of outsourcing instability, but recently satisfaction with internal training has increased and is likely contributing to the up and down nature of these figures. Enterprises use external providers to deliver more learning than internal resources can provide, and gain access to better learning expertise while controlling costs.
Further, an increasing number of organizations report they “don’t do enough training” to warrant an outsourcing relationship, and this, too, might contribute to the highly variable survey results.
Most companies only outsource portions of their learning functions — only about 4 percent outsource the entire learning function. This percentage has remained relatively constant, even while the percentage of enterprises outsourcing only portions of their learning function declined and recovered.
This makes sense. Outsourcing the full training function is not a decision that begins or ends quickly. And most organizations that are satisfied with their outsourcing arrangements have little incentive to radically change their use of outsourcing.
A Sizable Investment
Companies spend a bit less than a quarter of their learning budgets on outsource services. This is a small decline from 2014 and equals a similar share to 2012 numbers (Figure 2). The percentage of organizations that spend more than 40 percent of their learning budget on outsourcing is increasing: to 28 percent in 2014 from 20 percent in 2008.
Now, only 7 out of 10 enterprises that outsource learning spend less than 40 percent of their learning budget on outsourcing; in 2008, that share was 8 out of 10.
Looking at 2016, about half of companies expect spending on learning outsourcing to remain the same, which represents a significant increase from last year’s findings (Figure 3). This suggests companies that outsource are satisfied with their external learning providers. While the economic challenges have not fully retreated, only 14 percent of companies have indicated their learning outsourcing budgets will decrease next year — this is the lowest we have seen that share since before 2008.
Some analysts and experts predict enterprises would outsource only noncore activities. However, CLOs seem to be willing to outsource both core and noncore activities. The activities CLOs identify as most important include both custom content design/development and learning delivery. Strategy development is also important, with program oversight and learning technology management following with nearly equal importance.
During the past several years, the importance of various learning activities hasn’t changed much, which suggests overall priorities haven’t changed much either. The relationship between the importance of the activity and activities outsourced for custom content, learning delivery and technology management is obvious (Figure 4).
However, learning functions that are highly important but require the transfer of management responsibilities to execute such as strategy development show a lower popularity for outsourcing. Essentially, companies are using external learning providers primarily for activities that are important but do not require the transfer of management authority.
A Need for Expertise and Capacity
While other aspects of learning outsourcing have not changed much, the reasons for outsourcing has shifted. In the past, some 60 percent of companies chose outsourcing to gain access to better learning expertise or 70 percent chose to deliver more learning than internal resources could provide. These reasons remain consistent with last year.
As recently as 2007, speed-to-market was a significant rationale for using external providers. During the past several years, however, speed-to-market has declined in importance. Even while organizations seek to rebound quickly from the economic crisis, they are less likely to use external vendors as a way to get essential learning delivered quickly.
Companies more often use outsourcing to supplement internal resources to have learning resources available on an as-needed basis. And increasingly organizations believe that outsourcing is a more cost effective method to create or deliver training.
Those who outsource seem to be satisfied with their providers. While the percentage of CLOs who report being satisfied with their providers overall is relatively high, the long-term trend suggests satisfaction is increasing. This year, more than 94 percent of companies report being satisfied with their providers, an increase from 2014 and the highest the satisfaction has been since 2009. Subtracting those dissatisfied from those companies that are satisfied, results in a net promoter score of about 90 out of 100.
Companies that don’t outsource typically cite satisfaction with their internal learning operation, they don’t do enough learning to warrant an outsourcing arrangement, or that outsourcing is too expensive. These reasons have been consistently important for the past seven years of this survey.
As one CLO put it in last year’s survey: “Quality and knowledge matters a lot. To keep it consistent and readily available, I prefer to keep training internal.” Another CLO thought internal learning delivery adds flexibility: “We customize our programs to meet our exact needs of our employees as well as the organization.”
Some key findings from this survey include:
A small decrease in the number of companies that plan to outsource.
A decrease in the amount spent on outsourcing.
Companies that outsource are increasingly satisfied with the result.
Many CLOs surveyed offered suggestions to improve training outsourcing. Here is a small sample of their suggestions:
Brief trainers on organizational culture and priorities before they embark on learning customization.
Measure methodology at three-month intervals to see if the investment is changing behavior and outcomes.
Reduce ramp-up time for instructional designers and instructors.
With regard to content expertise, content must change to meet the client’s business need, use less off-the-shelf and more organization/situation specific content, and understand business and capability to deliver tailored-made interventions to address skill gaps.
As companies continue to recover with the economy, the use of external providers will change. Some organizations will attempt to increase their use of external providers. Others will attempt to “do more with less,” and still others are satisfied with their internal teams and will hold-the-line with their internal organizations.
Whatever organizations choose, aligning their learning offerings with business needs seems to be job one.
Maybe it’s just me. Maybe I was a freak occurrence in the freelancing world. But those first few years, I tried to handle every aspect of my business myself. Building a website, translating my website and business communication, administration, accountancy, creating marketing materials… everything.
I thought I was going to save heaps of money, I was going to teach myself valuable new skills in the process, I was going to own every single process of my business. I did all of that, but the juice wasn’t worth the squeeze.
You’ll realize you’re in the same situation as I was when, at the end of a long working day, you’re wondering where all that time went. Despite having been the busy bee from early morning on, you just don’t seem to have achieved anything that day.
The moment I realized I couldn’t do everything
For me, the moment of clarity came one day after having lost hours trying to conceptualize and create my company logo and I had just gotten nowhere. I vented my frustrations over a beer with a good friend of mine who happened to be a graphic designer. It just never occurred to me to ask him for help, but he kindly offered to have a go at it for free. A great looking logo fell in my inbox by lunch the next day, and it represented my company until the end. I felt so ridiculous for even having tried doing that on my own.
That’s when my view on how to run my business turned 180 degrees. I was good at what I did, so business was going well. But I somehow didn’t have the capacity to grow any further. For some reason my capacity to take on more clients peaked at five regular big clients and the odd one-timer. I was so busy with running every single aspect of my business myself that I ended up not having enough time to deal with my actual work, my core business. This had to stop if I wanted my business to survive.
Five steps for outsourcing business tasks
“If you want to go fast, go alone. If you want to go far, go together.” In this proverb, “If you want to go fast” shouldn’t be read as if you want to advance quickly with the wind in your sails. Rather, it should be read as if you want to vanish and crash miserably and never be heard of again, very soon.
I decided to lose my do-it-all-myself mentality and trust in the expertise of others to the advancement of my own. I accepted that the most effective person is not necessarily the one who does the most, but the one who gets the most done. Mind the passive tense in this sentence. It’s all about the tasks that need to be done and not so much about who does them. So I followed these five steps as a surefire way to improve my business:
Recognize the processes that are better done by someone else.
Weigh the pros and cons of investing in outsourcing
Find the right people
Prepare your business for growth
Evaluate your investment in outsourcing.
1. Recognize the processes that are better done by someone else
No matter how good you are at what you do, your business entails processes that aren’t directly related to your skills but are just as vital to its well-functioning. In my case, these processes were: building and maintaining a website, graphic design and general accountancy. Other examples of processes might be: translation, content writing, administration, software development, et cetera. Any process a specialist could do faster and better.
2. Weigh the pros and cons of investing in outsourcing
I was reluctant to outsource because I thought I didn’t have the financial means to pay for professional services. While it was true that I couldn’t afford hiring full-time employees, hiring other freelancers to take over some of my non-core tasks and processes turned out to be beneficial as I could now free up more time to actually make money, which in turn more than covered the cost of outsourcing.
That doesn’t mean you should outsource any task you don’t feel like doing yourself. It’s important to determine what you can easily do yourself and what will pay itself back by outsourcing. Hiring a good accountant, for instance, will save you more money on taxes than his or her fee.
3. Find the right people
You can start by looking through your personal contacts to see if any of your friends can help you, as was the case with my logo. I had a friend who made it a point only to hire friends. He said it was a win-win situation, a matter of trust and helping his friends forward in life. Your immediate entourage is definitely a very good starting point to create partnerships and collaborations.
If that fails, then the Internet offers plenty of services that do just that: Upwork.com (formerly Odesk), freelancer.com, and guru.com offer the services of thousands of web developers, creatives, virtual assistants, customer service agents, et cetera. If you’re on a tight budget, you can even find quick and cheap services for as little as five dollars on Fiverr.com.
4. Prepare your business for growth
The immediate result of outsourcing tasks is that you free up a lot of time. You can then sit back and take things slower or spend more time with your family, making outsourcing a cost. Or you can choose to use that time to expand your core business and generate more income, effectively cashing in on your outsourcing as an investment.
5. Evaluate your investment
Evaluate the effectiveness of your outsourcing efforts after a few months. See if they pay for themselves. Maybe you should look for cheaper alternatives (other freelancers), maybe some tasks lack the priority or are too basic to have them done by highly skilled and expensive freelancers. Perhaps you can keep those tasks for the holiday periods and hire a student or ask your nephew. It’s also possible you’ll decide that you’re better off doing certain tasks yourself in the end (or cancel them altogether).
Finally, you might realize that the administrative workload is getting so heavy that hiring an actual assistant as your first employee is becoming justifiable, making your business evolve from a one-man-show to something bigger.
Advisors should look at themselves as the client’s COO; someone who oversees the both the client’s plan, and the professionals who manage each “department”.
The scope of a financial advisor’s job is mind-boggling; from their core competencies of investment management and financial planning to the ancillary areas of marketing, technology, compliance and human resources. Essentially, they are small business owners with an endless list of responsibilities. Add to that their clients, who often have unbelievably high expectations and ever-evolving needs. It is a wonder how advisors get it all done, though many would probably admit, they don’t.
It is almost impossible to accomplish all of the daily tasks alone, and do them well. But advisors are forced to do so because clients, and regulators, expect this of them. So how can an advisor stay on top of everything and maintain a healthy business, not to mention a healthy balance in their personal lives?
Most hire staff members to spread the responsibility. This makes sense in certain areas which require limited skills and experience. For example, hiring a receptionist is certainly simpler and less expensive than hiring an HR manager or an analyst. For more specialized disciplines, such as marketing or compliance, advisors can determine where they lack proficiency, and find cost-effective solutions for outsourcing the work.
However, for areas of their practice that require highest-level expertise and client interaction, we encourage advisors to embrace insourcing, as opposed to outsourcing. Outsourcing has a stigma attached to it; the buck is being passed to someone else, instead of the advisor maintaining the responsibility themselves. Many people look at this in a negative light. Outsourcing is seen as just “getting things off your plate”. It also is not appropriate when client engagement is required, as the advisor should always be the main point of contact for the client.
Insourcing is the key for advisors to offload the work, but maintain control and responsibility over the deliverables to the client. Insourcing is traditionally defined as bringing in a specialist to train existing personnel to perform a task that would have been otherwise outsourced. But what if you took that one step further and just brought in a specialist to handle it all.
Consider the complementary professionals that advisors often work with:
Trust & Estate Attorneys
Hiring someone with the appropriate experience and knowledge to provide these resources internally can be costly. Meanwhile, farming out these services distances the advisor from the client interaction, and opens up potential problems, especially if something goes wrong. Instead, advisors can bring in professionals, almost like a board of advisors, to utilize as a resource and to engage with clients as needed.
Advisors should look at themselves as the client’s Chief Operating Officer; someone who oversees the both the client’s plan, and the professionals who manage each “department”. The advisor is ultimately responsible for managing the account and reporting back to the CEO, in this case, the client. As the COO, everything falls on the advisor’s plate, but they shouldn’t be the one doing the work in each department. Employ and oversee a “department manager” for each of the areas that you are not an expert in.
As a small business owner, it is important to assess your business’hierarchy. Are you sitting at the top of everything? Or are you managing the work yourself? Even worse, is your staff being delegated everything in a stream-of-consciousness each day. Staff members should not be expected to have the expertise of professionals, who have specialized education, licensing and experience. It is not fair to the staff member, nor the client, who expects the highest level of service and advice.
What Should Insourcing Look Like?
How do you offload the work, but not the responsibility?
First, establish an agreement with the professional you’ve chosen. This should include the following five items:
Acting as a knowledge resource to you and your team on an ongoing basis for questions, review of client information (trusts, tax returns, insurance policies).
Providing recommendations for client plans and working with you, the advisor, to determine the best strategies.
Making themselves available for client calls or meetings as needed.
Implementing any strategies once you and the client agree to move forward.
Servicing the client at a level that mirrors your own.
Second, agree upon a fee structure that will be mutually beneficial and fair.
Third, make your clients aware of the relationship and the resources you have made available to them.
Fourth, leverage the relationship. For insourcing to succeed, it requires the advisor to be proactive in identifying clients that need the respective resources. This makes the advisor more valuable to the client, and the professional.
Fifth, identify how the professional relationship might benefit you. Will they help you find new clients? Will they help identify opportunities within your client base? Will they provide ongoing education for you and your staff?
Once an agreement is in place and the steps above are addressed, the relationship should be run on a turn-key basis.
When a client needs specialized services, you will send the information to your insourced partner.
A call should take place to discuss the client’s details, and brainstorm ideas. The partner should then take the information and complete any research and/or analysis required, and prepare recommendations.
They will submit those recommendations to you, and then schedule another call to discuss and finalize them.
Either the advisor or the partner will present the agreed-upon recommendations to the client. This eliminates surprises on both sides.
If there is an action to take, and the client agrees, the insourced partner will take over and keep the advisor in the loop until all items are completed.
The partner will then maintain all follow-up and repeat-services in the future, while keeping the advisor up to date.
As with any relationship, evaluate your insourced solutions on an ongoing basis — every 6–12 months, to make sure they are still reducing your own workload, profitable, and most importantly, beneficial to your clients.