Why Outsourcing Storage of Paper Documents Can Kill Your Business?
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During an economic downturn, businesses (large and small) choose to outsource to save costs and stay in business. As a result, companies delegate critical tasks and processes to experts without actually needing to grow its full-time team. It keeps costs down and increases efficiency across the organization.
However, you shouldn’t go into it blindly just because it comes with a few benefits. It is crucial to perform basic research to know specifically what business processes you should outsource.
This is so because outsourcing processes like customer service might bring you benefits like improved customer loyalty and satisfaction. Outsourcing document storage can cause you:
- Retrievability issues.
- Costing related challenges.
- Lose control over important documentation.
- Loses as a result of human error or catastrophic damages.
Considering the financial impact of undertaking outsourcing, the reputation of the third party, the time spent negotiating the contract, the relationships that need to be built with the third party, the duration of the project, etc., document storage should not be on your outsourcing list.
A study led by Lyda Bigelow (University of Utah) found that companies are more likely to fail if they outsource operations critical to their competency, like document storage.
It puts them at a greater risk of failure (about 5-70% more) than companies who don’t outsource their important business operations.
Outsourcing might be a promising approach in some instances, but when it comes to document storage, it poses more risks than benefits.
8 Cons of Outsourcing storage of paper documents
Lack of Control
Outsourcing an essential component of your business, like document management, can be troublesome for your organization in the long run.
By outsourcing, you’re giving management & storage control of your documents to a third-party organization putting them at significant risk.
If Toyota’s story serves its purpose as a cautionary tale, it proves that losing control of critical components and processes can doom you to failure.
When your paper documents are stored offsite, you have a lack of control over the stored information. Thus, ensuring a proper system is in place becomes impossible. Moreover you will come across retrievability issues. Finding the information needed at the moment becomes a next to impossible task.
You may free up some space around your office by outsourcing but will lose control of your documents.
Risk of Disaster
The news of a fire at a significant records-management provider, consequently destroying critical documents of hundreds of customers, sent shock waves among all companies that are outsourcing or considering outsourcing storage and management of paper documents.
Paper documents stored anywhere are a fire hazard—at your organization or a separate facility.
The hard truth is that recovering paper or digital documents stored in your office or at a record storage facility is not a guarantee of business continuity when disaster hits.
Offsite Storage = Extra Costs
Storing documents offsite means paying a monthly retention fee for document management. Depending on the number of files, this can be a hefty fee and adversely affect your company’s operating budget.
Companies spend an average of $20 to file and store a paper document. (Ademero, 2020)
However, the costs associated with this storage can be higher than you imagine. It’s hard to handle compliance issues when you don’t have documents close to you. It can later lead to fines and lawsuits if files are non-compliant or misplaced and fall into the wrong hands.
Less Accessibility
The documents you are storing are only there so you can access them in the future if & when necessary.
However, if they are stored externally, how do employees get them when they need them? This is very inconvenient and a massive waste of time when employees need to access a particular file or information on short notice. This significantly impacts the productivity of the company as a whole.
Lost Files
Physical documents that are stored offsite at a record management facility are in danger of being misfiled. The storage facility may not understand the nature of the files and file them under a different system, which makes them hard to find.
Or their filing system may be random, and a small mistake can stop you from finding a particular document. This can be a big problem when someone needs something from record storage and can’t find what they need.
Backup Issues
Most document storage facilities are only responsible for storing, managing & retrieving your documents. So, if somehow your records are lost to an accident, they are not liable to maintain backups of your physical files.
Such scenarios may seem unlikely to happen, but if the worst comes to worst, you’ll be left high & dry without any backup of your data and a series of stakeholders to answer.
Lack of Flexibility
Contract with the storage facility could prove too rigid to accommodate change. Over 50% of companies cite performance or compatibility issues as the reason for ending outsourcing partnerships. These issues are far from the only risks that could plague your arrangement but can add friction to your business operations.
Distance from the office
Outsourcing document storage helps protect documents from local natural disasters. However, storing documents too far away can have disadvantages. Driving there can be time-consuming and expensive if you or your employees need to retrieve files.
Compliance issues
Not all storage options are created equal. Some do not provide the necessary security or storage conditions to ensure compliance with laws and regulations. However, other stores are working hard to meet regulatory requirements.
Long-Term Costs
It’s cheap to put files in an offsite facility but not so cheap to store them there for the long term. Long-term storage can eventually leave a dent in your budget. Additionally, you will have to pay extra to access these files and even more to delete them permanently.
Scaling Up Will Not Be Smooth
As the company grows, documents grow, and so does the need for more space to store them, but the storage facility may not provide you enough leeway to do that. As you focus on your company’s growth, you won’t have enough time conveniently available to renegotiate storage terms with your provider at every turn.
Effective document storage & management requires advanced solutions that outsourcing can not offer. But, a cloud-based DMS like dox2U can.
Better Alternative — Cloud-Based DMS
Outsourcing paper document storage is not a secure solution for archiving essential business information. When it comes to critical business information, the goal should be electronic archiving.
A cloud-based document management system stores all your documents on the cloud, eliminating the need to store the files physically at a storage facility or in-house. It can put all your concerns to bed and reap multiple benefits along the way.
Pros of Cloud-based DMS for storage of paper documents
- It supports cost-efficiency by redacting the costs associated with physical document management.
- Cloud-based DMS makes it easier to access & share documents internally and with guests.
- An intelligent cloud-based DMS offers enhanced security through encryption and auditing.
- It also supports scalability for SMBs or large enterprises at a minimum cost without disrupting business processes.
Apart from the usual benefits of a cloud-based DMS, dox2U goes beyond that and offers deep search capabilities along with a customizable workspace, making it one of the best in the market.
Key Takeaways
Companies prefer outsourcing some of their business operations and other tasks to cut costs. There’s nothing wrong with that. But outsourcing may not be a sound solution to everything, for example, document storage.
Data is the lifeblood of business, and storing it offsite or trusting a third-party organization to manage your company’s data is a risky business, riskier than most organizations can afford.
So, if you don’t want to kill your business in order to save a few bucks in the short term, choose a cloud-based document management system like dox2U over outsourcing your document storage. It will serve you better in the long term and boost productivity every day.
