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2.  Many people connect outsourcing with large telecommunications
and IT companies. However, somall businesses can gain substantial
benefits from outsourcing non-core parts of their company
operations.
 Many small businesses outsource
clerical, financial, accounting, payroll, distribution and other functions
in order to save money or because they have no other options.
Sometimes the costs of performing these operations in-house are
prohibitive.
 For example, in order for a small business to operate its own Internet
servers, it will need to put up substantial startup investments for
hardware, software, office space and skilled IT personnel. The
system will require backup power, cooling, and storage along with
24x7 monitoring and security.

3. • Reduce startup costs – The investments required for certain types
of functions may be beyond the budgets of many small
companies. Outsourcing providers typically provide all the
equipment, people and expertise needed to get the job done.
• Reduce overhead costs – Maintaining many functions outside of
the main thrust of the small business can also consume
substantial portions of the company’s budget. For example,
something as simple as a reception desk can prove a major
headache if the company experiences high worker turnover.
Finding the right person for the job and then training that person
can be time-consuming and costly. With the outsourcing option,
the contractor finds and trains all the workers that you need.
• Improve company efficiency – By outsourcing peripheral
functions, the small business can concentrate on the work that
really brings in the money. Fewer distractions can lead to
increased overall efficiency.

4. • Increase flexibility – With outsourcing, it is easier to fold
up and start new projects. The company does not have to
worry so much about hiring and firing workers as the
outsourcing company does this work. The outsourcing
company also handles problems like office and industrial
space, equipment and other resource needs.
• Increase competitiveness – Since outsourcing provides
small businesses with many advantages they can gain a
competitive advantage over companies that try to handle
too many functions in-house. By focusing on their core
business, the can improve performance and lessen
distractions and wasting of vital resources.
• Reduce risk – By outsourcing certain operations, the small
business is also outsourcing the risk involved with those
operations. Therefore, this option provides a great tool for
risk management especially for functions that require
significant expertise.

5. Here are five of the best ways that small businesses can save money through outsourcing:
1. Outsource clerical and reception duties – One popular type of outsourcing today is the virtual
reception desk and answering service. In fact, it is possible to outsource all of the office’s basic
clerical work using virtual or other services. A virtual answering service takes business calls using
either automated recorded messages or human receptionists. Many business centers and shared
office setups offer these types of services for all tenants in the building.
2. Outsource logistics – In manufacturing and transportation hubs, it is popular to utilize third party
logistics (3PL). These types of companies provide warehousing, packaging, assembly, fulfillment,
shipping and other services. Traditionally, many companies would try to handle these operations in-
house, but there is growing acceptance of using subcontractors in order to lower overhead costs.
4. Outsourcing manufacturing – Many companies may develop products, but they are in no position
to manufacture these products. Manufacturing requires significant upfront investment. A production
line may require milling, molding, lathing and other expensive equipment that would break the
budget of most small companies. Therefore, they have no option but to find contractors to handle
their manufacturing needs. In the United States and many other countries, it has become
increasingly difficult to find shops and plants that can handle their manufacturing requirements or
that can do the job at affordable prices. In such cases, they may look for manufacturers in foreign
countries.

6. 4. Outsourcing IT operations – Information technology work generally
requires significant expertise. Computer scientists, computer engineers
and other IT workers tend to demand high salaries and hefty benefits
packages. For this reason, it often makes sense for small companies to
outsource IT work. Running a data center is a major operation that will
extend beyond the expertise and resources of most small companies.
Even simple matters like designing a website may distract too much
from the company’s core business. Businesses can find cheap
outsourcing services for IT work online from providers in other
countries like India and the Philippines, which both have substantial
English-speaking populations.
5. Outsourcing payroll – Payroll outsourcing is a very popular option for
small businesses and some sources claim that up to 50 percent of
small companies pay tax-filing penalties. By outsourcing payroll, the
contractor assumes all the risk for tax filing and for ensuring that the
company complies with all government payroll regulations. Outsourcing
firms can handle the entire payroll operations for a small business.

7.  The list above gives some idea of ways
that small companies can save through
outsourcing. However, there are many
other options including outsourcing
marketing, sales, finance, accounting,
legal assistance and human resources.
 Finding good outsourcing providers takes
a little work and the Internet provides the
easiest option for research. The
competition is fierce and, generally, it is
better to work with the more experienced
companies with proven records. However,
it is possible to get great deals at times by
contracting completely unknown
companies that are sometimes located
offshore in other countries.

8.  While dealing with such smaller firms
carries some risk, when you find one that
provides high quality work, it may be
possible outsource all or a good portion of
your work to that company.
 Virtual outsourcing companies are often
the easiest to work with since you may be
able to handle all your dealings with the
provider online. Many of these companies
have packages set up, so the client can
arrange the service without ever speaking
to anyone. They simply choose the
package they want, fill out the necessary
forms and pay online using a credit card
or other form of electronic payment.