AT THE NORTH AMERICAN INTERNATIONAL AUTO SHOW in January, General Motors announced that it was putting $1 billion towards a new initiative – building the lithium-ion batteries for its electric-powered Chevrolet Volt in-house at a new manufacturing plant in Michigan. It was a shocker (especially to the overseas company that expected to handle the project). But GM may be on to something. In a recession, many managers want to make operations leaner than Victoria Beckham. But sometimes it’s better to reallocate your underworked staff (or even hire more people) and do the work yourself. Here, a few examples.
| 1 | Fix quality issues Sometimes it takes more time and resources to communicate with a contractor about what you need – and fix any problems – than it takes to hire someone to do the job. People’s satisfaction with their outsourcing arrangements are mixed, according to a 2008 study by the Centre for Outsourcing Research & Education, with only 50% of clients finding satisfaction with their outsourcer in certain areas. If it isn’t working, consider insourcing. |
| 2 | Add value Some industries are hurting more than others. Book publishing, for instance. But one Alberta company is going on the offensive, expanding its product offering beyond its niche. In January, publicist OutRight Communications partnered with a literary agent to help them reach new clients, ones who wanted to come to one place for a multitude of tasks. If sales are flagging, consider adding value rather than subtracting expenses. |
| 3 | Diversify your services or product line Take advantage of the slower business environment. The best time to explore other revenue generators is when you aren’t swamped with day-to-day tasks. Take Calgary’s Level 2 Sportswear Inc., a promotional advertising firm that recently partnered with an external person to launch a product for the health-care industry. “A year ago, we probably wouldn’t have even had time to look at this,” says CEO Ryan Berry. But the opportunity came along, we found a product, we know the right person to market it, and we want them to go out and attack a different market.” |
| 4 | Avoid setbacks In January, auto supply company Magna International announced that it would begin insourcing work to reduce its reliance on “shaky suppliers.” If you hire a contractor to complete a major project, such as manufacturing a new product line, and that company fails, it could derail the project – and the company’s financial stability. You need to consider how it will affect your business, do your research or do the work yourself. |
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