Reducing the ratio of payroll costs to productivity one of the steps that oil and gas companies will take in recovering from the economic crunch they are facing. One available option is to outsource differing components of your operation, or to augment them. This is when a third party is contracted to perform tasks, operations, or a specific job—whether onsite or off.

When considering outsourcing, it is important to weigh the potential benefits against potential detriments. Below is a list to to use as a starting point:

Outsourcing Benefits

  • Save money
  • Keep company employees focused at core activities
  • Efficiency in back-office functions
  • Reduce overhead such as office space
  • Manage the risk of employee turnover
  • Expertise in area of focus
  • Free up time to develop and train internal staff
  • Budget controls
  • Additional resources to give flexibility during times when you are short-handed for short term

Outsourcing Weaknesses

  • Potential loss of managerial control
  • Hidden costs: services not included, cost of legal advice, etc.
  • Confidentiality at risk: proprietary data or knowledge shared (Make sure your data is protected and the contract has a penalty and insurance clause if an incident occurs)
  • Quality assurance and response time to changes
  • Potential instability of outsourcing company

If it’s decided that a company would benefit by outsourcing, a suitable vendor needs to be selected. Collaborate with the people who are the stakeholders in the operation or job. As a team, define the service, business, and technical requirements needed from the supplier, as well as any constraints that need to be met. You can find your supplier in a variety of ways: referrals, current suppliers, listings online or via phone book, or even posting the potential service needed. But after you have created a list of suppliers, it’s a good idea to go through a formal process in selecting your vendor. Here are some links to a few good articles giving options for processes to follow:

How to Outsource Successfully

6 Steps to Find the Best Supplier

How to Create an Effective RFP

A partnership with another business can be benefit you not only in cost savings, but may also supply you with business processes that find new productivity.