Outsourcing has been established for some time as the strategy of choice for large corporations eager to pay specialists for performing non-core tasks, rather than employing in-house teams. But how do smaller firms benefit from the trend?

Small to medium-sized enterprises (SMEs) do not usually possess the scale or internal resources capable of managing the outsourcing process. Yet SMEs make up almost all of the UK’s registered businesses – see 'The small business market' below – and need outsourcing for the same reasons as their larger counterparts.

A lot of small companies are one-man bands. They have enough of a challenge delivering services or goods to their clients, drumming up new business, and completing VAT and tax returns. The prospect of managing something new through a labyrinth of service level agreements can strike fear into the heart of even the most capable free agent. Strategies tend to be personal and specific.

James Ewart, managing director of niche travel firm Explore the World, says that as an SME, it is unlikely his organisation would want a large number of market researchers on the streets of London asking questions of the public to formulate a marketing strategy. ‘My requirements are more along the lines of helping me build a new web site and designing a variety of databases or electronic brochures,’ he says.

Ewart also mentions a recurring nightmare for every SME boss: just keeping the hardware running.

‘Some sort of maintenance of company computers and networks is often needed by smaller companies,’ he says. ‘I tend to sort out my own computer problems, but it is quite likely that other companies might be happy to open their network to an engineer who could resolve problems by remotely accessing the office systems.’

Nivid Technology Solutions offers the type of support service Ewart describes. The firm aims to offer a complete IT department to smaller organisations, and it has engineers that can support clients in London. For most firms, however, support takes the form of remote diagnosis – assuming the problem is not with the network itself.

Pushpendrasinh Jhala, chief executive of Nivid, says there are a number of key reasons why smaller companies should take a look at an outsourced solution.

‘Beyond just cost-reduction or creating a climate of certainty, the smaller organisation needs to take every opportunity it can to focus on its own business – rather than spending time on PC support,’ he says.

‘Such a focus should increase management time available for the core purpose of the business. Outsourcing also gives smaller companies access to experts within the area they are hiring. And gaining access to experienced IT engineers, for example, can significantly help the business by ensuring that the systems are managed well, not just managed as best as possible with the skills available in the office.’

Both Jhala and Ewart suggest that the biggest problem for smaller companies is a lack of understanding about the process of contracting and the process of defining exactly what the service provider will do. ‘Where do I find an external source I can trust that can do what I want with some understanding of what I am trying to do, and how I am trying to do it?’ says Ewart.

‘When you sit at a desk and discuss a problem with another human face-to-face it is a lot easier than when you write your requirements down in a brief. Not all small business owners will be prepared to do this.’

But some small firms are already taking a move towards external provision. Sean Cook, director of graphic and web design specialist Level Three Creative, has experience of not just outsourcing, but also offshoring small IT projects to India.

‘We have used programmers in India for the relatively small programming jobs that developing a small web site may require, such as getting forms to execute on the web server,’ he says.

‘The benefit for a company such as ours is simple – I can get the basic programming tasks I need doing completed cheaply and quickly.’