When Outsourcing Makes Sense: A Guide to Selecting a Third-party Vendor

May 18, 2020

Small businesses and larger organizations have many of the same needs, but due to size and limited resources, outsourcing services to third-party vendors can often reduce operational costs for small businesses, freeing up time to focus on operating their business.


What services can be outsourced?

Business services commonly outsourced include:

  • Payroll Services and/or Bookkeeping
  • Manufacturing
  • Information Technology
  • Customer Service and/or Call Center Operations
  • Legal and/or Human Resources
  • Marketing and/or Advertising


Where do I begin looking for a reputable vendor?

Ask for referrals from your existing business connections and networks including CPAs and business attorneys. Your local Chamber of Commerce and other professional organizations publish Membership Directories and can be great resources for referrals. Do a little research first: explore their online presence and seek reviews and testimonials that speak to the quality of the services provided.


Does the size of the third-party vendor matter?

There are three main choices: large national companies, local firms, or freelancers. There can be benefits to each, for example a local firm or freelancer will be more likely to be able to provide customized services and support.


What is the extent of the assistance that you need?

  • You might choose to outsource work that would normally occupy one employee.
  • Or you could outsource functions that would normally occupy a whole department (example: payroll and benefits).

TIP! Determine which you need as there are benefits to both and much of the thinking behind the selection process will depend on the level of services and support you will need from a third-party.


What level of support will the vendor provide?

As you begin having conversations with potential vendors it is important to do some fact-finding.  What will the support you will be offered look like?

  • Will you be directed to an “800 number” or will you be provided with an account representative’s name and personal phone number or extension?
  • What does the organizations turnover rate look like? What is the likelihood you will have a different representative in a few months?
  • Is there a member of senior management available in the case of an urgent issue?
  • What is their process for providing support? Are you logging a ticket with a call center or are you working directly with someone who has the skills to provide a quick resolution?

TIP! Take notice of the titles a vendor gives its workforce. If an organization connects you with a “Client Concierge” it indicates that they value customer service as a priority!


What is the vendor’s experience with your industry or similar industries?

Depending on the type of business you operate this could be a real deal breaker!

A payroll service that has a book of bars and restaurants may have more experience in educating its clients about industry specific labor regulations (e.g. tipping regulations).

A marketing firm representing doctors will understand the importance of confidentiality and HIPPA regulations relating to patient testimonials, as well as the importance of avoiding comments that could be construed as medical advice.


What value does the firm provide in addition to its standard services?

  • Does the vendor offer training and other educational services as a resource to its clients?
  • Do they offer networking opportunities, hold mixers or customer appreciation events?

TIP! A locally owned payroll provider may provide resources to ensure that, in addition to your paychecks being issued, your organization is kept up to date with regulatory and compliance changes that are vital to your organization.


Location! Location! Location!

Is this organization’s office or customer service center located in your time zone? If you have an urgent request would your request wait until the next day?

How important to you is it to do business locally? There is power in supporting a smaller locally owned business!

According to Independent We Stand, “For every $100 spent locally, $68 is invested back in the local economy”.

In some cases, this means the ability to have the contractor or representative meet at your business location or at their place of business in person which can be extremely helpful in obtaining a higher level of support.


The PaySmart way of doing business

We are a locally owned and operated payroll service provider, located in Mechanicsburg, PA, serving the small business community. We provide the same excellent level of customer support to all our clients, including micro-businesses (processing payroll files for only one or two employees).

Our organization is led by the expertise of an on-site CPA overseeing all financial transactions, ensuring the protection of your business.

We survey our clients to ensure that our services exceed expectations and we go to great lengths to understand the concerns of the small business community providing support in the form of educational materials, training, and meeting client needs.

Our process of receiving payroll data is customized based upon our client’s needs and often varies based upon the industry.

Our clients receive service from seasoned, experienced, concierges who provide the highest level of service. Our clients are provided with contact names and numbers vs. an 800#.

We are immersed in our community and are active within our chambers of commerce. We regularly contribute back to the community, supporting local non-profits and welcome opportunities to connect with local hard-working business owners.

Learn more about how PaySmart can benefit your organization by contact our New Client Concierge, Jessica Watson at Jessica.Watson@paysmartpa.com .