Outsourcing, as a strategic element in key decision making tool of companies is gaining new grounds with each passing day. A recent study by Gartner says that Companies with 100 to 499 employees now account for just 7.8% of the $50.5 billion business-process outsourcing market, but that number is expected to grow to more than 8% of a $78.8 billion market by 2009. Such data only proceed to corroborate the fact that more and more small businesses are joining the fray in outsourcing various processes to gain competitive advantage.

So what makes outsourcing such a lucrative proposition for small businesses? And why should small businesses consider outsourcing? The following points provide the best answers.

i) Better allocation of time: Statistics suggest that owners of small business typically spend between seven to twenty five percent of their time handling employee-related paperwork issues which consume most of their productive time. But by outsourcing some or all of their employee-related functions — such as payroll, bookkeeping, business owners can focus on what they do best. And in the process they can improve productivity and even save some money.

ii) Better allocation of resources: Businesses often have to run departments when they don’t require their services in a regular basis. For example business with strong volume of sales often hire the services of a full-time bookkeeper to oversee the books when in reality such services have little to do with the volume of sales but more with the level of accounting activity, such as invoicing, bill paying, payroll and the like. Outsourcing book of accounts can in such case results in better allocation of resources apart from savings for the company. Estimates point that companies with full-time bookkeeper can save to the tune of $50,000 annually by opting for outsourcing services.

iii) Increase efficiency: Business owner who do everything by themselves often suffer from the handicap of want of expert services. Again co-ordination and management of all the various functions in a business organization becomes an onerous task and generally results in red-tapism. An outside service provider, apart from instilling the organization with superior services gives the gift of outstanding cost advantage. This invariably increases the efficiency of the firm. In fact studies prove that increasing the efficiency of operations is the propelling factor behind 58% of the outsourcing decisions of businesses.

iv) Control capital costs: By opting to outsource, companies can convert fixed costs into variable costs. Again businesses are spared from investing large sum of money in developing infrastructure .So business owners can pump up money directly into revenue producing activities.

v) Reduce risk: Business is all about taking risks. Marketing of products, retaining customers, competing and edging out competitors, adopting new technologies constantly, making fresh investments in research and development and infrastructures are some of the things that companies do on a regular basis. Outsourcing service providers share and manage this risk for their clients, and they generally are much better at deciding how to avoid risk in their areas of expertise.

vi) Phenomenal saving on costs: Finally, a company opting for outsourcing can benefit by accessing specialized services at nominal rates. Outsourcing of services bookkeeping and accounting like can save the company almost around 50% of what it would have cost for an in house staff. The amount thus saved can be utilized in increasing the working efficiencies of the business.

It's true that outsourcing can save money, but that's not the reason that drives business owners to opt for it.. As many firms discovered during the outsourcing "mania" of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. Outsourcing provides a number of long-term benefits to the company if done in a planned and proper way.

Sukant, an accountant by profession is the co-founder of APT Services.Please follow the link http://www.aptservicesonline.com to know more about the bookkeeping services provided by APT Services.