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Business Outsourcing: A Comprehensive Guide for Business Owners

Business Outsourcing: A Comprehensive Guide for Business Owners

Want to efficiently grow your business but you feel as though you're lacking the resources? Outsourcing may be the answer you've been looking for.

17th September 2021
Reading Time: 3 minutes

Starting a business or looking to significantly grow your already existing business? Business outsourcing might just be the key you’ve been looking for. Outsourcing can open so many doors and help expand your business in a cost effective and time efficient way. A range of small, medium and even large businesses utilise the outsourcing process to their benefit and so can you.

Let’s take you through what outsourcing is and how it can benefit your business growth.

What is Outsourcing?

Business outsourcing is the process of hiring a third party to perform certain tasks. These third parties can solve, manage or handle whatever aspect of your business you don’t have the expertise for, or people-power to handle. The third party is generally another company, which are experts in their field. However, the third party can also be an individual. The third party company can either work on site in your business, or in their own facilities. So, there is a lot of flexibility connected to outsourcing. Basically, the outsourcing relationship is a contractor relationship. When your business decides to outsource some of its processes, the third party will not be classed as an employee. For this reason, there are a range of benefits to outsourcing your business processors.

What Can I Outsource?

Starting and running a business can take many hands. At times, some aspects of business are difficult or overcomplicated to complete alone, especially if you are only kick-starting your business. In actual fact, you can outsource any aspect of your business you desire. The most common tasks and areas businesses outsource are:

  • Information and technology services, including programming and application development,
  • Manufacturing processes,
  • Human resources tasks,
  • Financial tasks, including payroll and bookkeeping,
  • Legal tasks and processes,
  • Marketing services,
  • Customer care services,
  • So much more!

Basically an aspect of your business could be outsourced.

A range of businesses will outsource entire departments, such as an IT department, to look after, manage and develop their technology needs. This reduces the stress and the cost of facilitating these types of services within your business.

With the rise of online companies, many businesses don’t need a physical address or office. So many tend to outsource their mailing systems. All registered business must nominate a registered office address. Consequently, your businesses registered address cannot be a PO box address. Here at Lawpath, our Virtual Office helps a range of businesses legally register the address of their business as a virtual office. This ensures that your personal address and business address are kept seperate for added security, safety and efficiency.

Should I have an Outsourcing Agreement?

If you choose to hire a third party business or individual to perform a specific business task, they will work as a contractor for your business. As with many types of commercial and employment relationships, it is always best to have a written agreement. The written outsourcing agreement should take the form of a Contractor Agreement (Company) or a Contractor Agreement (Individual).

Your outsourcing agreement should outline the following terms and conditions:

  • Nature or the services the third party will perform,
  • Express description of the services to be performed,
  • Duration the services will be performed for,
  • Confidentiality between your business and third party,
  • Intellectual property provisions,
  • Warranties and indemnities,
  • Payment and expenses and,
  • Termination.

This list is not exhaustive. If you need a hand, our solicitors can customise and personalise your agreement to ensure you are covering all your legal bases.

Now, let’s dive into the range of benefits outsourcing could potentially bring to your business.

The Benefits of Outsourcing

Reduce your businesses costs

This is one of the major advantages of outsourcing. Your business can lower its labour costs, operation costs, employee costs, as well as reduce their overall overhead expenses.

For instance, many business choose to outsource the technological components of their business. Therefore, their business will not have to spend their finances on building IT infrastructure, which can be a heavy investment for businesses to make.

Faster growth

When your business decides to outsource some business activities, more often than not you are looking to hire companies or individuals whom are experts in their field. This generally means that your business will be receiving a high quality of work in a quick and efficient manner. In turn, this can improve the speed on your businesses growth.

Focus on the core features of your business

Outsourcing gives you both the time and money to focus on what really matters, the focus or objective of your business. Therefore, it allows you to place majority of your energy into the critically important aspects of your business.

Key Takeaways

Outsourcing is a great way to speed up your businesses process and growth. It gives businesses the capabilities they might not otherwise have had. Put simply, outsourcing is the process of hiring a third party to complete certain tasks and duties. The third party becomes a contractor to your company and should be covered by a Contractor Agreement. Outsourcing can save your business time, money and resources, to allow you to focus on more important aspects and duties.

Don’t know where to start?
Contact a Lawpath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Author
Mai Sarkissian

Mai is a Digital Marketing Coordinator at Lawpath, working as part of the Content Team. She is in her final year of a Bachelor of Laws degree at the University of Wollongong. She is interested in Business Law and Employment Law.