How to Decide What Work to Outsource

Not only will team members feel happier about focusing on work they’re good at, but this process will also free up time to tackle more ambitious challenges.

Teams everywhere are being asked to do a lot with a little. But is your team spending their time doing the right things—work that plays to their, and the organization’s, strengths? We’ve created a simple exercise which helps you determine what work you should be doing, and what work you should leave to the (other) professionals.

Stop, Start, Insource, Outsource Exercise

  1. Collect a list of your open projects. Survey your team to determine what projects they are working on, including those that are customer-facing and those that manage work internally.
  2. Break each project down into a list of skill-sets. What roles or areas of expertise are required to complete this project? Write each role/skill-set on a separate card or sheet of paper. Examples could include web development, product design, recruiting, compliance, etc.
  3. Answer two simple questions. For each skill-set or role, as a team, try to answer two simple questions:
    • How critical is this role to our sustained competitive advantage? In other words, which of these roles is most pivotal to the ultimate difference our customers experience in our products or services and which are simply needs the business has in order to function?
    • How specialized of a need do we have for this specific role? In other words, is there something about our specific market or industry that requires specialized knowledge to do this job?
  4. Rank and prioritize. Map each project or skill set accordingly on two axes. The ‘x’ axes range from “Work that keeps us at parity with the market” to “Work that creates a competitive advantage”. The ‘y’ axes ranges from “Work that is universal to companies like ours” to “Work that is unique to the market”. Sort each role or skill-set in the appropriate quadrants.
  5. Discuss and debate the following quadrants:
    1. Work that keeps us at parity AND is a universal need for companies like us: Is there a marketplace of companies that we could outsource this work to that could do it faster, better, and even cheaper than us? What would be the impact of outsourcing this work?
    2. Work that keeps us at parity AND is highly specialized just for us: Why do we have such a specialized need for work that doesn’t directly contribute to our competitive advantage? Is there a way we can stop doing this work?
    3. Work that contributes to our competitive advantage AND is a specialized need: This is work that definitely belongs in-house and is likely representative of our unique strategy in the market. How can we continue to own this space?
    4. Work that contributes to our competitive advantage AND is a universal need: If there’s a universal market for this work and we’re the best at it, can we sell this function to other companies? For example, the creative team at 37signals found themselves so good at managing projects (because they had built their own in-house tool), that they began selling that tool to other creative agencies. How could we package up our skills and sell them, even to our competitors?
  6. Make a decision. Schedule a decision-making meeting to identify ways to outsource or stop work that doesn’t make sense for the organization.
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