How to spot a smart fast-growth company
Farming out tasks that are not part of a company's core competency frees up resources that lets firms better concentrate on growth, competitors and profit.
Consider recent research that indicates:
seven out of 10 fast-growth companies that outsource report they save money as a result (PricewaterhouseCoopers); and
fast-growth companies that outsource enjoy higher revenue growth than their counterparts that do not outsource, and they expect to continue to do so (American Electronics Association).
Reasons for outsourcing
Primary reasons CEOs cite for outsourcing peripheral functions include cost savings (62 percent) and access to technical expertise (60 percent).
lower costs,
improve company focus,
access world-class capabilities,
free internal resources for other purposes, and
supply resources that are not available internally.
The most frequently outsourced business functions are financial or administrative in nature.
The top five outsourced tasks among fast-growth firms surveyed by PricewaterhouseCoopers include:
payroll (55 percent);
employee investment programs (30 percent);
tax compliance (22 percent);
benefits and claims administration (20 percent); and
maintenance and equipment services (20 percent).
Not a cure-all
Outsourcing is not a panacea for lousy management, of course.
To lower your risk, consider the top five reasons outsourcing goes wrong, according to The Outsourcing Institute:
failure to communicate company goals and objectives to the vendor,
lack of strategic vision and plan,
choosing the wrong vendor,
lack of ongoing management of the relationships, and
lack of a properly structured contract.
Smart managers train employees to take over jobs that prevent them from tackling critical, core tasks.
If you want to spot a smart, fast-growth firm, look for companies that do the same: train outside arms and legs to take over jobs that prevent them from focusing their limited resources on hitting a home run.