Should I Hire A Consultant?
When should you hire a consultant for your business?
And when should you outsource a function?
All businesses large and small can benefit from expert advice or services in specialist areas. Advice can range from business start-up know-how, to areas such as IT security or business insurance. The difference between consultancy and outsourcing is that a consultant should be hired to do something that you cannot do. Or something which needs an independent, and hopefully more objective viewpoint, to achieve. A good example of both of these is penetration testing the security of your IT system. Your own IT staff is unlikely to have the range of skills required and they certainly don't have the objectivity needed.
Outsourcing is about taking something that you do, changing the way it is managed and paid for, with the aim of improving the service (by giving it to a specialist provider) and reducing the cost. For example, instead of running a canteen internally, you outsource this function (and the current staff) to an outside company who specializes in this area. You reduce overhead by cutting staff costs (particularly long terms costs such as pensions and health plans) while the specialist company is able to make a profit through the economies of scale. Hopefully, they know more about running a canteen than you ever will.
But bringing in a consultant or external contractor can be an expensive affair. Costs could potentially escalate through the roof if you do not properly scope what you want them to do or keep supervisory control of their work.
There is also a risk attached to bringing anyone from the outside into your company. They are not stakeholders in your company and do not necessarily have your best interests at heart. From janitorial services to accountancy, the person brought in may not do the job to the standards you expect and may even pose a threat to your assets or your reputation. While this can also be true of insiders, there you have much more control over the hiring process (for example, vetting staff) and can mitigate these risks to a greater extent. Finally, your staff can react negatively to what they perceive as a threat.
Therefore, the decision to hire a consultant or outsource a service has to involve two factors:
- Does the cost/benefit analysis add up?
- Have I covered the risks?
This means examining the other options. Training is an obvious option to consultancy where you pay to bring the knowledge in and keep it. Options to outsourcing include reviewing how the function is currently managed internally and seeing if there is room for making economies or improvements without undertaking the sometimes painful business of contract management.
Covering the risks is more complex. Risks are both internal - have I scoped the function or requirement accurately? (Changing a consultancy or outsourcing contract is a very expensive experience). Have I kept my staff informed of what is happening and why it is necessary? And, for outsourcing, have I provided reassurance about ongoing job security and pay?
External risks include selecting a firm with a good reputation and a suitable degree of direct experience in the areas you are interested in. It may also mean checking the security arrangements (e.g. for hiring staff) in that company. The contract should be properly reviewed by a good business lawyer before signing, so as to ensure that any liabilities or penalties for non-fulfillment are properly defined and enforceable. Finally, make sure that the company has taken out suitable business insurance and fully complies to any legal provisions (for example, health and safety).
Happy Hunting! |
