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Is It Better To Outsource Or Invest In Equipment

Is It Better To Outsource Or Invest In Equipment

Businesses spend a lot of money every year on outsourcing. One study found that deals totaling more than £3 billion were signed in the year to September 2016 – double the value of those agreed in the previous year. Put simply, outsourcing is a big business and big business needs outsourcing.

But how do you know when the time is right? What should you look to an outside company to do and what should you keep in house? There are three key factors to consider: cost, speed and management. By mulling over the issues surrounding each of these factors you’ll be able to make an informed decision.

Cost

Firstly, how much would it cost? Every business has to keep an eye on the cost of its operations and ensure these don’t spiral out of control, especially when it comes to bigger scale projects where the rewards might be high but so too are the risks.

You need to bear in mind that both choices have a cost attached to them. ‘In house’ work might need an investment in equipment and manpower and, depending on the task in hand, this could be more money than the price of outsourcing the task to an outside party. Alternatively, you might already have the skills at your disposal and be able to save yourself time and money.

You need to be specific with this. If you’re building a large industrial structure – something on the scale of a wind turbine, say – cover all of your bases. Which materials will you use? Where will you source them? When it comes to preparing the materials, will you use a blast cabinet? What paint will you apply to the surface and what properties does this need?

Failure to answer such questions will mean that you can’t weigh up the cost either way.

Speed

No-one ever has an unlimited time frame in business. Your project more than likely needs to be delivered at the right moment to suit the needs of your customers/the market. You’ll also need to feel the financial benefit of your activity as soon as possible. If a task requires a tight turnaround then you might well not be in a position to spend the time required sourcing equipment and training staff. It pays to work out the ‘end date’ you have in mind before you work out which option is the most plausible.

Management

Finally, how much control do you need? Some businesses want to keep a close eye on the progress of a big scale project and are ill at ease with the thought of being at arm’s length. Clearly, outsourcing makes this more complicated – The Balance rates it as the number one disadvantage. It needn’t be impossible if you have a strong working relationship with your contractor and everything is properly spelled out from the start – but it’s worth stressing that this is necessary to the smooth running of your project.

Only by considering the cost, speed and control can you decide whether outsourcing is needed to deliver your big scale project.

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