Core vs non-core activities: what to keep in-house

Key takeaways

Core vs non-core activities is the test of what makes customers choose you. Core activities create your advantage and belong in-house. Non-core activities are necessary but done the same way by every business, so they are the most cost-effective to outsource. Sort activities before comparing any costs.

• Core: work that customers choose you for.
• Non-core: necessary work every business does the same way.
• Core: keep in-house, even when outsourcing is cheaper.
• Non-core: outsource where the loaded cost is higher in-house.

What are core and non-core activities?

Core activities are the functions that create your competitive advantage, such as your product, expertise, pricing and key relationships. Non-core activities are functions every business needs but that do not set you apart, such as data entry, invoicing, first-line support and diary management. Both matter; only core activities differentiate.

• In-house vs outsourcing: which model is more cost-effective?

How do you tell core from non-core?

Ask three questions of each activity. Would customers notice or care if a competent provider did it? Does it rely on knowledge only your business has? Would doing it better win you more customers? If the answers are no, it is probably non-core.

• Customer noticing: would anyone choose you less if a provider did it well?
• Unique knowledge: does it depend on context only you have?
• Advantage: would doing it better win more business?

• Which tasks a small business should outsource

Why does core vs non-core matter for cost?

Non-core work done in-house often sits with expensive people. When a £45,000 manager, costing about £29.98 per worked hour, spends 10 hours a week on admin, that is about £13,900 a year of senior time on work an outsourced team could do for £9–£18 an hour. Moving it frees capacity for core work.

• The opportunity cost of doing everything in-house

Which activities are usually non-core?

For most UK SMEs, the following are non-core and strong outsourcing candidates, because they follow rules and can be measured.

• Data entry and CRM updates.
• Invoicing, credit control and supplier admin.
• First-line customer email, chat and phones.
• Appointment booking and diary management.
• Order processing and returns admin.
• Routine reporting and document chasing.

• BPO Solutions for UK businesses

Can a non-core activity become core?

Yes. Customer service is non-core for many firms but core for a brand that wins on service. The test is your strategy, not the function's name. If fast, personal service is why customers pay more, keep the parts that deliver it in-house and outsource only overflow or out-of-hours cover.

• The hybrid model: part in-house, part outsourced

Should you ever outsource core work?

Rarely, and only parts of it. You might outsource specialist execution, such as software development, while keeping product ownership in-house. The rule is to keep decisions and relationships in-house and buy capacity, not the other way round.

• In-house vs outsourced software development costs

How do you map core and non-core work in one session?

A two-hour workshop with the people who do the work is usually enough. List every recurring activity on a whiteboard or spreadsheet, note who does it and the hours per week, and ask the three core questions for each. Then sort into core, non-core and unsure.

The unsure pile is the interesting one. It often hides activities that are core in part: for example, complaint handling where the first response is routine but the resolution needs judgement. Split those into their routine and judgement parts.

• Run a time audit to find what to outsource

What does this look like in practice?

A pattern we see in UK mortgage brokerages: advisers spend a large share of their week chasing documents and updating case notes. Advice and client relationships are core; chasing and data entry are not. Moving the non-core work to a managed team lets advisers see more clients without adding headcount.

• Admin outsourcing for mortgage brokers
• See client work

Core vs non-core checklist

Use this list with your team.

• List every recurring activity and who does it.
• Ask the three core questions for each.
• Estimate the hours and loaded cost of non-core work.
• Flag non-core work done by senior or expensive staff.
• Choose one non-core process to move first.

Next step

Send us your activity list. We will help you sort it into core and non-core, and cost the non-core work in-house and outsourced, in a 30-minute call.