Outsourcing Core (and Non-Core) Work

Why You Must Define Your Company's Core Business Before Outsourcing

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Whatever the size of a business, or the field that it's in, a critical rule of outsourcing is that a firm should not outsource one of its "core functions." While this rule is almost universally agreed upon by outsourcing experts (no matter where they hail from), the definition of "core" as it relates to work, varies considerably among outsourcing experts.

Core and Non-Core Business Functions

In the broadest sense of the term, core functions are the most essential functions in your firm and those that are the most critical to your firm's revenue stream. In some cases, core functions may be defined by law, but in most cases, it is up to the individual firm to define what functions are core to their business operation. Likewise, non-core functions are those that are of the lowest value to the business and are the most generic. While there are different definitions in different industries, the translation of this simple statement into a business plan is a very complex process. Few firms (even those that seem similar) will agree on what differentiates core from non-core functions.

An Example of Core Versus Non-Core Functions 

To better understand the practical differences between core and non-core, consider how this rule is applied in legal process outsourcing (LPO). LPO is unique because it is a licensed and regulated profession. The functions that are considered to be the practice of law are illegal for anyone other than a lawyer to perform. These are the functions that are generally considered to be the core functions of a law firm. However, a law firm may choose to outsource very specialized areas of their legal practice, even though they may constitute major sources of income and require specialist lawyers. Generally, though, the outsourcing discussion is about the functions that fall outside of the specific legal definition of the "practice of law."

The practice of law is a phrase that often describes a clearly defined set of functions that occur during the representation of a client (for a fee) in the courts. However, the majority of work within a law firm (or legal department of a company) is not actually time spent in court. Answering phones, distributing emails, and completing general office paperwork (the same type of administrative work undertaken in any kind of industry or office) is considered non-core work. Even creating a very basic contract which entails filling out a legal template does not usually require a lawyer (except when it comes to reviewing the final product). However, every firm has a slightly different notion of under what circumstances a contract can be written from a template by a non-lawyer and when it needs to be hand-crafted by a lawyer. The difference (as stipulated by each individual law firm or legal department) impacts how much work that firm considers to be core and how much is non-core.

Up to the Company

In the end, pre-thought must be placed on clearly defining exactly what functions of your business are core and which are non-core before making a decision as to which tasks and functions will be outsourced. As the legal example shows, there's no universal right or wrong, just an internal understanding among departments and executives about your firm's operations.