Outsourcing allows small businesses to obtain services and expertise they could never develop in-house, focus on core competencies and, in many cases, cut costs and improve efficiency.

To determine what to outsource, consider:

1. What not to outsource. What actions does your company perform that add value for the customer and give you a competitive edge? These are activities to keep in-house. Others are candidates for outsourcing.
2. As your business grows, focus on having access to, not ownership of. For instance, some information technology vendors provide a particular software solution via access to a secure server as opposed to the client purchasing it off-the-shelf. The same goes with services. Some companies outsource the entire human resources function, for instance.
3. When considering vendors, ask for referrals from companies similar to yours. Contact these companies and ask them what they like and dislike about the provider and how outsourcing is benefiting either their top or bottom lines.

Action Steps
The best contacts and resources to help you get it done

Tap into experts, articles

Much has been written about the value of outsourcing. Make use of free resources to find out what works and what doesn't.

I recommend: Discover the details at The Outsourcing Institute, Outsource.org and Accenture Report: Driving High-Performance Outsourcing.

Explore you IT outsourcing options

Information technology is one of the most commonly outsourced areas for small business. Few business owners are IT experts and technology changes quickly.

I recommend: Some possible solutions specifically for smaller businesses include Geeksquad, AskDrTech and Small Business Consultants. Three of the larger providers are Unisys, Computer Associates and IBM.

Going overseas

Today businesses can tap into outsourcing partners anywhere. Protection of intellectual property, language barriers and other concerns prompt some businesses to use third-party companies to set up and manage outsourcing agreements outside of the U.S.

I recommend: Outsourcing Management Services LLC is one such company. OffshoreXperts.com is a directory of offshore outsourcing service providers.

Shop around

A variety of services are candidates for outsourcing. Some comparison shopping in advance can narrow potential partners down to two or three. Then ask for proposals.

I recommend: Compare companies at Outsourcing Index or BuyerZone.

Some go solo

An outsourcing arrangement can be with one person, and many former corporate executives have made second careers out of working as contractors for small companies. You might want to outsource the CFO function, for instance.

I recommend: Find such talent at ExecuNet or in the classified sections of trade publications and national business publications.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Chances are, you already outsource something, whether it's cleaning services, direct mail or another lower-level function. Examine these relationships (length of contract, communication infrastructure, performance metrics, etc.) to determine what is working and what is not and apply this to higher-level functions that are candidates for outsourcing.
• •  Network within local and national associations to find new outsourcing opportunities. Nearly everything can be outsourced. Finding out what's offered in the marketplace will help to open your eyes to more opportunities.
• •  There is a Certified Outsourcing Professional (COP) designation granted by the International Association of Outsourcing Professionals. The group of 250 includes organizations that both use and provide outsourcing services.