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Guest post by: Gourab Nanda Become an Author

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Many small businesses like yours are pulling in a clean 30 to 40% in profits by cutting down their expenses and by focusing more on their revenue generating activities. Industry reports and surveys carried out recently revealed that midsize and small businesses are raking in more profits and witnessing a steady surge in their operations, thanks to outsourcing. For instance, a small business, based in Newton, MA employs virtual assistants for its projects and this has increased its productivity by about 40%.

As popularly, but falsely perceived that outsourcing is a noble way for the third world countries to rob our country's economy, reality is, it's been heavily used as a strategic tool to accentuate business growth and to put our country's lagging economy back on track.

Over 63% of small business owners have made-up their mind to cut-down their overhead expenses (Forrester Report), and how do they to do it? The answer is through outsourcing. You can take advantage of it too

The question whether outsourcing is needed or not, is long been answered, what remains for you to decide is what and to whom to outsource and things to look for before making this strategic business decision. A recent survey by PriceWaterhouseCoopers made it clear that improving efficiencies is the most urgent need as businesses are experiencing tremendous pressure to improve productivity and cut down costs while fighting with lower profit margins.

"What activities to outsource?" - Get this right, and you can set-up a great outsourcing model for your business.

One of the biggest challenges faced by businesses today is to identify the activities of the business that could possibly be outsourced or near shored. Of course, there is an easy way out if you categorize your activities into strategic/non-strategic and competitive/non-competitive functionalities. You for sure know that strategic and competitive activities like design and development of your products/services, enhancing them, R&D, designing the sales process and marketing plan, requires your direct and absolute attention as they are purely responsible to accentuate business growth and rake in huge profits. While most business have rightly identified the non-core activities as back office work, 24x7 phone support, designing and constantly maintaining your presence on the web, HR/payroll, keeping accounts and other IT requirements. These, if run as part of your business, will not only waste your time, focus, and manpower, but also burn your pockets.

How do small businesses outsource?

Small businesses typically outsource by hiring small service providers (for core activities), independent virtual assistants, or companies offering virtual assistant services (for non-core activities). With outsourcing, you can not only run your business more professionally, like the big boys do, but also shift your focus on core revenue generating activities.

It is recommended that you initially look for service providers who offer a centralized service for the all the non-core activities, this will erase all the barriers of dealing with multiple service providers like lack of coordinated efforts and difficulty in managing them.

Right shoring is the mantra in outsourcing. You can segregate activities that could be handled at a lower budget and higher efficiency at an offshore location like India/China (offshore outsourcing), and business-specific activities that are best handled by local employees (near shore outsourcing). An optimum mix of both is the best option for small businesses.

"Optimization is the new transformation," says Mark Toon, CEO of outsourcing consultancy EquaTerra.

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