Financial Times

Outsourcing: a source of opportunity for small businesses
By Nilooka Dissanayake
Do you know the story about the sage who went to meditate? He decided to seek seclusion and went into the jungles and found a cave for himself. The only problem he discovered was that mice started bothering him, chewing up his loin cloth and dancing around the cave. To get rid of this menace he adopted a kitten. The kitten started meowing and bothering his meditation each time it got hungry.

The sage bought a cow to ensure a continuous supply of milk for the hungry kitty. A cow needs looking after. Feeding, watering, milking and looking after the cow took so much of time and created so much annoyance for the sage. The wise sage decided to take a wife to manage his cave, the cow, the kitten and the loin cloth.
What happened then, I do not need to tell you. Our sage eventually abandoned all ideas of meditation and… so the story goes.

This is what happens to companies as they grow bigger and bigger and diversify from the original area of competence into others. Over the years, they tend to lose track of their core product or service. This can happen to small or large companies regardless of their age.

Fortunately, as it happens with everything, people-CEOs, managers and executives-eventually realize the mistake. They decide to "stick to knitting." They decide to focus on what they do best, their core product. They decide to spend all their efforts in developing core competencies as a source of competitive advantage. In this process, companies divest themselves of unnecessary business units. The day to day chores-like serving tea, security and surveillance, processing documents, staff medical benefits, servicing of products, tax returns, managing marketing campaigns, PR activities and so on-get outsourced.

And who take on these jobs spilling out of the cost cutting, reengineering and back-to-core activities? It is often the smaller, more nimble companies who can show distinct cost advantages and specializations.

For example, Russel's Tea will take on your office tea services and the catering. Abans Electrolux Services will take on the routine cleaning activities. Smartmedia will do your annual reports. Specialised web developers can develop and maintain your websites and intranet. Secretarial Services can attend to company secretarial needs. Specialised and direct marketing companies and ad agencies (big and small) can support your marketing activities.

Now, let us think what else can be outsourced by the big and not-so-big companies. What about printing monthly bills and posting them to your many thousands of customers? eWis Group will take away this hassle from you because they have expertise in specialized printing operations. What about staff training? What about computer maintenance and looking after office equipment? What about stationary management? What about all these other things that bother business executives and are not really part of core activities of their organisation?

Think of selecting and sending greeting card for example. How much time can be saved by outsourcing this to a specialized company? There are many such activities that hold potential for outsourcing.

My duty here is not to tell companies that outsource to do it with caution. That is their responsibility. Anyone who outsources core and strategically important activities in a haphazard manner deserves what they get.

My duty, dear reader, is to show you that many opportunities arise for small businesses as a result of the cost cutting, reengineering and such initiatives by large local companies and by multinationals. The Internet is making this outsourcing easier by enabling US and European companies and multinationals to outsource their non-core activities off shore. Countries like India and Sri Lanka benefit as a result.

There are examples where companies use call centres overseas to provide 24 hour service hotlines to their customers. Some US hospitals and medical care institutions are using the time difference and the Internet effectively. Indian doctors (based in India) process and analyse their X-rays and medical reports overnight. The patients receive faster service outputs. US financial institutions are using Indian accountants to process their US based client accounts and taxation reports. This is at the higher end.

What can you, as a small entrepreneur in Sri Lanka, take on as a business idea from all this? Nothing is impossible to those who believe they can. All you have to do is to use your brains and be innovative in seeking solutions for potential clients. Knock creatively and the door will open. Ask with the right spirit and you shall be given.

We welcome your comments about outsourcing, both from the point of those outsourcing and those taking on the contracts. Let us know your positive and negative responses. You can reach us on ft@sundaytimes.wnl.lk or call on 075-552524.

The writer is the Managing Editor of Athwela Vyaparika Sangarawa (Athwela Business Journal), the only Sinhala management monthly targeting the small and medium sized business operators and its English version, Small Business International magazine.

Back to Business