“B2B” stands for “business to business” and it’s a business model in which a company provides goods and/or services to another company. When most people think of a business, more often than not, B2C (business to consumer) companies come to mind. These include restaurants, boutiques, and any other type of business that sells products to individual customers or provides services to individual clients. Most new entrepreneurs run a B2C company.
Outsourcing is a practice in which a company hires another company to perform certain business tasks and functions. Essentially, outsourcing is a B2B transaction because one business is hiring another business to provide a service.
Pros and Cons of Outsourcing
Outsourcing can be a great option for businesses. One of the biggest benefits is that it saves money in the long run. When you outsource a certain business portion, you don’t have to hire additional employees and pay them for the job. Yes, you’ll have to pay the company you’re outsourcing to, but you’ll be spending more on paying employees because of health insurance, workers’ compensation insurance, and pension plans.
Other benefits of outsourcing include:
- Employees become more efficient when business tasks are outsourced
- Outsourced tasks are less likely to have error because of hiring experts
- You business expands quicker
However, with every advantage there’s a disadvantage, and there are a few disadvantages to outsourcing. Probably the biggest is that you lose full control over whatever business function(s) you choose to outsource. This is why it’s important to not outsource to just any company— do your research to make sure you’re leaving that part of your business in good hands. Other possible cons to outsourcing include:
- Communication issues
- Language and time zone barriers
- Possible security risks
- Reduced quality control
What You Should Outsource
As a general rule, businesses tend to outsource the menial, tedious tasks that don’t directly relate to other business matters that their employees are responsible for. These tasks will vary, depending on the type of business, but these tasks are generally outsourced.
Accounting deals with the finances of a business, so it’s not something to tackle if you’re not a financial expert. This is why many businesses choose to outsource this part of their business by hiring professional accountants.
This pertains to businesses that deal with their customers online: outsourcing to a professional call center can save you time and money. Just make sure that the company you hire knows how you expect to speak to and handle your customers.
Human Resources (HR)
HR is another commonly outsourced part of a business, and it encompasses everything related to employees, from hiring to termination. Some companies can even help with recruiting and interviewing, as well as benefits administration and attendance issues.
Information technology (IT) is another widely outsourced function of a business. This is because IT functions are a very specialized and necessary part of all businesses, and many businesses can’t function without them.
Logistics and Shipping
This is a huge focus for e-commerce businesses, although other types of businesses who ship directly to their customers may also choose to outsource this part of their business. Hiring a shipping and logistics company takes a lot of stress off of your shoulders, allowing you to focus on sales.
Many businesses wish to keep their manufacturing in-house, but it can be expensive to do so— especially if you’re a small business. The good news is that you don’t have to outsource to an overseas company (if you’re in the U.S.) because the U.S. still holds a decent share in global manufacturing.
Other B2B Services for Businesses
Communication is key in all businesses, and a communication software can be helpful— especially if you have remote workers. Many companies use the app Slack because it’s an easy-to-use platform that lets team members collaborate.
A managed service handles the daily operations of your business applications. If you use a lot of software to manage different parts of your business, you’ll need a sort of “hub” to manage everything. JD Edwards offers a managed service to handle all of your business operations.
This automates marketing efforts so that business owners won’t have to do manual marketing. Mailchimp is an example of one of the largest platforms for marketing automation.
Businesses need other businesses in order to function successfully and more efficiently. So if you’re a B2C company, don’t be afraid to outsource certain tasks to other businesses. More often than not, the pros outweigh the cons, and you see more growth and expansion.