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Outsourcing: it's about delegating, not abdicating
07 March 2011
Outsourcing makes a lot of sense. If you are a small or medium sized businesses it enables you to access a small but vital amount of deep experience, knowledge and capability.
Two fundamental business functions that are becoming increasingly common to outsource are those of Marketing Director and Chief Financial Officer. And the popularity of this as a strategy is probably linked in no small way to fact that most of the organisations providing these outsourced services are of a very high calibre. The majority cater solely for, but work with many, entrepreneurial businesses so they don't just understand you, they have a very good idea of what works and what doesn't work.
But even the very best outsourcer can't do the whole job for you. You still have to own the function and be accountable for it.
Yes the outsourcer can help you decide what things should be done, and it can
make sure those things are done right, but ultimately it's up to you to decide whether it's the right strategy for your business, and up to you to keep on top of it.
I was reminded of this recently when I caught up with a young technology company. The business employs about 10 people - all of whom are technology gurus - and it outsources its CFO and marketing functions. The business is run by four partners who have divided up accountability for the operational functions (sales, R&D, support and implementation) between themselves but no one is accountable for the outsourced functions.
As a result no-one is really directing, evaluating, challenging and responding to the outsourcers in a big picture strategic way, but instead each of the partners gives the outsourcers lots of tit bit tactical advice and ask small itty bitty questions. Consequently the outsourcers have been on the receiving end of lots of conflicting advice and opinions
I reckon outsourcing works best if you think of outsourcers as a special type of employee; an employee that you don't have to train, that you don't have to keep busy, that you don't have to direct tactically, but that you do have a responsibility for in terms of the outcome of their work on the business. If you hired a CFO as an employee you wouldn't deny all responsibility for finance, rather you would give them the leadership and then let them get on with the work
To help get this right inside your business I suggest that you put an internal name - maybe even your own - against the outsourced functions on your organization chart. The person who is named is accountable for those functions and provides that function's report at the management meeting.
The technology company I mentioned told me they weren't getting what they expected from their outsourcers but when pressed they couldn't articulate what they were expecting. In effect they had waved a magic wand and abdicated responsibility for the outsourced functions rather than owning and delegating it.
Outsourcing is a great way of getting premium assistance into your business without it costing the earth, but you need to lead it and manage it.