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Five Tell-tales the CEO watches to know when to outsorce

Introduction:

The CEO must scrutinise his business constantly to watch for emerging issues as well as opportunities. Outsourcing non-core effort can be both a solution to problems and an opportunity to gain an advantage in a demanding business environment.


For the CEO of a fast-moving SME, identifying when to outsource is critical to avoiding operational constraints that undermine the business and its ability to succeed. Outsourcing is not just a tactical decision; it is a strategic move to concentrate on the things that build value for customers and in the business.
 

This white paper identifies five tell-tale signs that indicate to the CEO that it's time to consider outsourcing, along with clear indicators for each.
 

1. Struggling to Scale

Scaling a business involves expanding operations, increasing output, and meeting growing customer demands. However, SMEs often hit capacity limits due to resource constraints.
Indicators:

 

  • Capacity Overload: Teams are consistently working at full capacity, leading to burnout or inefficiencies. For instance, employees may complain about excessive workloads or an inability to focus on strategic tasks.

  • Inconsistent Quality: As demand grows, maintaining consistent quality becomes challenging. This could manifest in customer complaints or declining satisfaction scores.

  • Bottlenecks in Operations: Processes such as production, customer service, or order fulfilment slow down as the business grows.

  • Delayed Growth Initiatives: Projects like entering new markets or launching new products are postponed or get delayed due to insufficient resources.

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When scaling becomes an uphill battle, outsourcing non-core functions can free up internal resources and enable your team to focus on scaling the things that deliver value.

2. Cost Concerns

Cost management is a perennial challenge for SMEs. Rising expenses and inefficient processes can erode profitability and hinder reinvestment into the business.


Indicators:

  • Escalating Operational Costs: Key areas of cost, such as payroll, are growing disproportionately compared to revenue.

  • Budget Constraints for Core Activities: Limited financial flexibility prevents investment in core business functions or innovation.

  • Unpredictable costs: Frequent cash flow issues due to unexpected or volatile costs.

  • Non-core Distractions: Routine tasks consume significant time and money without adding proportional value.

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Outsourcing can offer cost-effective solutions by leveraging economies of scale and specialised expertise from external providers.

3. Skills Under Pressure

In today’s competitive landscape, access to specialised skills is essential for success. However, SMEs often face skill shortages that can hinder performance and innovation.


Indicators:

  • Skill Gaps in Critical Areas: Your team lacks expertise in areas such as marketing, accounting, or compliance, which are essential for business operations.

  • Difficulty Hiring Specialists: Recruitment efforts for niche roles take too long or fail due to high market demand or budget limitations.

  • Overreliance on Key Employees: A small number of employees hold critical knowledge or skills, creating risks if they leave the organisation.

  • Declining Productivity: Employees are stretched thin trying to perform roles outside their expertise, leading to reduced efficiency.

 

Outsourcing allows you to flexible access highly skilled professionals without the long-term commitment of hiring full-time staff.

4. Missed Deadlines

Timely delivery is crucial for maintaining client trust and operational efficiency. Persistent delays signal that your current capacity or processes may not be sufficient.


Indicators:

  • Overwhelmed Teams: Employees struggle to meet deadlines due to excessive workloads or unclear priorities.

  • Disappointed Customers: Feedback from customers highlights dissatisfaction with late deliveries or missed milestones.

  • Frequent Firefighting: More time is spent addressing short-term, urgent issues rather than prioritising time to look ahead to spot opportunities and navigate around problems.

  • Project Backlogs: Important projects are consistently delayed because day-to-day operations consume all available resources.

 

When deadlines are missed regularly, outsourcing can help alleviate pressure by delegating tasks to external experts who can deliver on time.

5. Too Many Opportunities

While growth opportunities are exciting, they can also overwhelm an SME if internal resources are insufficient to capitalise on them effectively.

 

Indicators:

  • Inability to Pursue New Opportunities: Promising projects or partnerships are turned down due to lack of capacity.

  • Missed Market Trends: Your team struggles to respond quickly enough to emerging trends or customer demands.

  • Overextension of Resources: Attempting to seize an opportunity leads to diluted focus and distractions across the organisation.

  • Reduced Innovation Capacity: Teams are so busy managing current operations that they cannot dedicate time to developing and delivering new things.

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Outsourcing enables SMEs to seize opportunities without overburdening internal teams by providing flexible access to additional resources when needed.
 

Conclusions

Recognising these five tell-tale signs—struggling to scale, cost concerns, skills under pressure, missed deadlines, and too many opportunities—is essential for CEOs of fast-moving SMEs.

 

Each sign comes with specific indicators that point towards operational strain:

  1. Struggling teams unable to keep up with growth demands.

  2. Rising costs that threaten profitability.

  3. Skill shortages affecting core business productivity and innovation.

  4. Persistent delays undermining client trust.

  5. Missed opportunities due to limited capacity.

 

By monitoring these indicators closely, you can determine when outsourcing is necessary.

 

While this white paper does not delve into the benefits of outsourcing in detail, it is worth noting that outsourcing offers advantages such as cost savings, scalability, access to skilled professionals, improved efficiency, and the ability to focus on core competencies—all critical factors for sustaining growth in a competitive market environment.

Flexiion:
  • We are a pure-play infrastructure support service that’s 24/7 and independent of branded providers

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  • What you get with us that is too costly and impractical on your payroll:

    • Skills and experience in all the major Cloud brands and technologies, 24/7

    • A flexible, scalable team to offload the generic workload that is necessary but diverts resources and effort away from adding value

    • Independent specialists in Cloud in Operations at scale, which rarely exists in dev teams and is culturally different from what they do

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