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Lang offers this checklist to clients as a self-evaluation tool to help them determine whether to outsource a particular function. The client identifies the activity it is considering outsourcing and then rates it from 0 to10, to represent the degree to which it is core or noncore. A task that’s a core function of the operation gets a low number (meaning “don’t outsource”). A high number, corresponding to the degree to which it is noncore, indicates “do outsource.” A total higher than 70 indicates an activity the client probably could benefit from outsourcing. Items 1 through 8 pertain to operational issues; 8, 9, 10, 11 deal with staffing considerations; and 12, 13 and 14 address cost.
Here’s how it might be filled in by the CEO of a midsize education association, with an annual budget of $5 million and a staff of 16, who needs to determine whether to outsource accounting or replace a staff person who has just announced she’s leaving. The department also has an administrative assistant who has responsibilities besides accounting.
Name of business activity:
“accounting functions.”
1. Core/noncore _____
(Accounting is not a core activity for the organization:
10
.)
2. Reduce service/increase service _____
(We’d have more time for serving our clientele:
10
.)
3. Less flexible/more flexible _____
(Arrangement might be more flexible, to vary with our seasonal needs:
8
.)
4. High risk/lower risk _____
(We don’t know how hiring an employee will work out. With outsourcing there’s less risk, and we can find the right skills quickly:
10
.)
5. Easy to maintain/difficult to maintain _____
(We’ve had luck with our accounting department in the past, but the future is uncertain:
5
.)
6. Difficult to outsource/easy to outsource _____
(It’s easy to find an outsource firm to provide the accounting services we need:
10
.)
7. Inability to grow/ability to grow _____
(If our organization grows, we can easily add services if we outsource:
8
.)
8. Inefficiencies/increased efficiency _____
(Efficiency could increase if specialists do the accounting and the administrative staff member takes on additional work:
8
.)
9. Instability/stability _____
(Not much turnover:
5
.)
10. Stagnant ideas/new ideas _____
(The outsourcing firm is up to date on all the latest accounting information:
10
.)
11. Basic skills/cutting edge skills _____
(A candidate with new ideas and top skills probably will require too high a salary:
10
.)
12. Higher operating costs/lower operating costs _____
(Cost of outsourcing may be lower based on proposals received:
7
.)
13. Fixed costs/variable costs _____
(Our organization likes fixed costs, such as knowing the salary of the hire:
3
.)
14. Small capital requirements/large capital requirements _____
(Does not apply here.)
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Results:
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70 and below:
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Don’t outsource.
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71 to 100:
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Consider outsourcing.
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101 and above:
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Outsourcing is likely to be beneficial.
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In the example above, the total is
104
. Outsourcing the organization’s accounting probably would work out well.
Source: Lang Group.
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