May 125 mins
Many have the idea that all tasks should be outsourced so as to reduce operating costs of hiring in-house employees to complete the job or to streamline the business’s efficiencies. However, before outsourcing any part of your business, you have to understand the advantages and possible disadvantages that outsourcing will bring.
Read on to assess whether to continue or avoid the idea of outsourcing for certain operations and decide the significant impact that will be incurred to your company.
What are the Advantages of Outsourcing
The advantages of outsourcing include:
Time efficient
Outsourcing tasks such as back-office operations or administration frees up your company’s resources, allowing you to focus on the core functions of the business
Reduce costs
Outsourcing has a lower labor and operational costs as well as a reduction in overhead expenses as compared to hiring in-house staff
Savings on technology and infrastructure
Outsourcing doesn’t take into consideration the costs of infrastructure costs as the hired personnel will have the full responsibilities for the business processes and hence, developing the infrastructure for the same costs
Expertise
Having a skilled resource, the business can easily seek for the right talent and assuring higher quality of outsourced work done
Increased work efficiency
Outsourced vendor brings in specialized knowledge and the adequate knowledge, leading to an increase in productivity and efficiency of your business
Reduce risks
Outsourcing tasks removes large share of risks as they are shared among the outsourced vendors which is beneficial as your company will face lesser risks of having to pay fines or penalties
Staff flexibility
If businesses that has cyclical or seasonal demands for operation to bring in extra staffs, outsourcing create opportunities to avail of additional resources as staffs can be realized when they are no longer required as outsourced vendors have taken over
What are the Disadvantages of Outsourcing
Although there are many pros of outsourcing your company’s functions, you should also note the disadvantages that follow, which include:
Loss of managerial control
Once the external vendors are hired, the managerial control belongs to the other company and there could be a risk of the contractor enters into transactions or doing things in the name of your company which you would not approve, damaging your company’s reputation.
Quality issues
It is almost not guaranteed that your vendor is driven by the same mission and standard that drives your company. The contractor’s main focus is to help the business make a profit.
Hidden costs
You may wonder, why are there still hidden costs when I chose outsourcing in order to cut costs? Well, anything that may crop up later during the contractual relationship that is not covered will constitute in additional charges such as insurances, etc.
Threat to security
If your company has access to tons of confidential such as access to client mails and bank accounts, payroll and medical records, there might be a risk of breach in confidentiality.
Hence, the outsourcing company must have their credibility as well as their background checked before being engaged.
Time and effort
Selection of vendors should not be done lightly as time and effort should be put into researching, testing and selecting the right and suitable partner.
Issues faced replacing outsourcing vendors
Lack of knowledge of the outsourced functions also meant that you as the business owner might have difficulties describing the services and proper job scope to the suitable supplier.
Global challenges Faced by Singapore Outsourcing Providers
The main issue is that many companies in Singapore chose to outsource service to providers in other countries. This problem is worsened by the fact that for many Singaporeans who are seeking a job, positions that are related to outsourcing have lost their appeal for various reasons.
This has led to a decline in local talent in this field and has not seen growth in recent years, making it difficult for many of Singapore companies to seek outsourcing services within the country.
Therefore, those who carry out outsourced services in Singapore ought to counter this turn of events. They may do so in either of two ways:
- By offering services that most or all of their foreign counterparts do not
- By providing services at such a high level that they will naturally become the first choice of all companies, regardless of the location of the companies in question
The Role that Paul Hype Page & Co Can Play
We at Paul Hype Page & Co is one of Singapore’s leading providers of accounting and HR services. Our team has much expertise and knowledge in areas such as taxation, incorporation, work visas, and many other corporate services.
Some of the services we provide include:
- Calculation of monthly payroll
- Employer registration with the Singapore Central Provident Fund (“CPF”)
- Calculation of statutory deductions including CPF, skills development levy, foreign worker levy and ethnic/religious fund deductions
- Payroll processing and annual reporting
- Issuance and maintenance of electronic pay slips / remuneration reports
- Electronic-leave management
- Management reporting of trial balance, ledgers and reports issued monthly
- Creditors control over purchase invoice and aged creditor reports
- Cash management of bank reconciliations, treasury controls and invoice / payment processing
- Liaising with auditors over audit queries and updating of trial balances with year-end audit adjustments
- Debtors control over sales invoicing and aging debtors report
- Preparation and conversion of financial statements
- Other reports such as cash flow, budgetary control, and fixed asset register
FAQs
Outsourcing less important tasks will free up time and space so you can focus on what you and your in-house team do best.
This ensures your team stays productive without having to focus on too many time-consuming tasks or having to hire and train more employees.
Outsourcing is extremely helpful for all kinds of businesses. Most commonly, it’s used when businesses get a lot of customer queries and when they don’t have time to focus on every single aspect of the business or customer service.
Outsourcing these kinds of tasks helps you and your employees devote your attention to the main requirements of your business to keep things going smoothly.
Some of the most noteworthy benefits of outsourcing include that it’s cost-effective, saves time and space, and gives you the time you need to focus on your core business function and main duties.
No. You have every right to make sure the team assigned to your services are of adequate experience and knowledge and will complete the tasks according to your company standards.
Just keep reading...
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Accounting Service Outsourcing
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