Experts reveal how SMEs can fix outsourcing risks and use AI
NEW SOUTH WALES, AUSTRALIA — Small and medium enterprises (SMEs) are rethinking their approach to outsourcing as economic pressures mount and artificial intelligence (AI) reshapes the tasks businesses can delegate.
In a report from Dynamic Business, experts believe that most SMEs still do not recognize the full extent of dangers they face as their outsourcing decisions lead to compliance violations, cybersecurity risks and damage their corporate reputation.
Navigating outsourcing risks and compliance
According to industry experts, SMEs consider outsourcing as a vehicle to save capital but do not always realize the strategic or regulatory complexities connected to the process.
“The management of outsourced providers has never been so important. Gone are the days of being able to say, ‘I outsourced that, it’s not my problem’,” said Sara Deady, Partner at McGrathNicol Advisory.
“From health and safety to cyber security, the outsourcing of any business function requires careful consideration of the risks and benefits. You may be able to outsource the job, but you can’t outsource the risk,” Deady added.
Deady observed that organizations require strong processes which need to include defined job functions, established performance metrics and exit plans for their operations.
“At the onboarding stage, it is crucial that SMEs consider the following: Do you really know who you will be doing business with? Do you know what risks your outsourced providers may pose to your business?” she said.
Sharon Melamed, Managing Director at Matchboard, added that many SMEs fail to understand which outsourcing model they’ve adopted.
“Around half of SMEs are on a managed service arrangement with a BPO, and the other half are on a staff leasing model. They are completely different in terms of both pricing and deliverables,” she said.
Melamed also noted that location selection has evolved, with Fiji and the Philippines emerging as popular destinations for customer service, bookkeeping, and administrative roles.
AI and partnerships reshape outsourcing strategy
Experts emphasize that outsourcing is no longer just about cost—it can be a growth lever. Steve Rotter, Chief Marketing Officer at DeepL, described AI as a form of digital outsourcing.
“The benefits of this include but are not limited to: increased efficiency, AI translation allows for speedier, more streamlined project delivery; do more with less…; quality versus quantity,” he said.
“Ultimately, by leveraging machine translation and embracing AI, businesses can optimi[z]e their localisation workflows, improve the quality of their content, and maximise their ROI,” he added.
Christina Foxwell, CEO at Ignite Purpose, stressed that treating outsourced teams as partners rather than external resources drives productivity and engagement.
“The key to successful outsourcing lies in treating your outsourced team as an integral part of your own… From our experience, such partnerships boost productivity and satisfaction on both sides,” she said.
Foxwell reported that strategic outsourcing enabled her firm to cut payroll costs by two-thirds while successfully launching a global operation.
As SMEs face challenges of regulatory inspection, AI implementation, and their increasing offshore business operations, experts state that modern outsourcing requirements now need advanced solutions.
Success hinges on risk management, cultural alignment, and long-term strategic partnerships—moving well beyond simple price comparisons to create scalable and resilient business models.
