8 Advantages of Outsourcing in Your Small Business

October 24, 2014

The word "outsourcing" often makes one think of factories moving to China, or customer service call centers in India. However, outsourcing operates closer to home and at a much smaller scale as well.

If your small business is growing beyond the limits of a solo operation, but you are not yet ready to take on the obligation of full-time employees, outsourcing can help you expand your capabilities while minimizing your risk and expenses.

1. Outsourcing saves on human resources costs.

When you hire full-time employees, you take on a number of obligations. You will need to generate a payroll, pay insurance and other benefits, pay employer taxes and unemployment insurance, and maintain tax information for each employee.

In addition, there are the costs and paperwork associated with any benefits you offer, such as health insurance, sick leave, and vacation time.

If you have more than one or two employees, one of those employees will be spending at least part of their time managing the HR obligations for everyone, or you will have to do it yourself.

When you outsource work, all these costs are managed by the individual freelancer or the contracting company that provides the employees. Keep in mind, however, that their fees will include these expenses.

2. Outsourcing saves on overhead for your business.

If you have full-time employees, or even part-timers working at your site, you have to provide work spaces for them, including desks, computers, office supplies and more.

Many contractors and freelancers work from their own homes or shared workspaces. You will save money on having to supply these, although again, remember that contractor and freelancer fees take their expenses into account.

3. Outsourcing saves time and money on training

Even when hiring a knowledgeable and experienced person, you will have to spend some time training them how to do the job as you want it.

In developing an employee over the long term, you will often invest in providing training to them either informally, or by sending them to classes and seminars. Contractors are already trained and experienced, and if you hire through a contracting or employment agency, they have been vetted and references checked.

To get the most out of any contractor you hire, take time beforehand to develop detailed plans and expectations for what you need accomplished and communicate those clearly to the freelancer or agency you retain.

4. Outsourcing saves you time on tasks that you could do, but someone else can do faster and better.

As a business owner or solopreneur, you have to wear many hats. Hiring specialized freelancers allows you to take off a few of those hats.

While you can learn enough to make a simple website for your business, or create a convincing direct mail piece, or design a logo, in many cases it is easier and faster to hire someone else to do it for you.

By engaging someone who specializes in these things, you are likely get a more polished and sophisticated result than if you do it yourself.

5. Outsourcing allows you to have employees only when you have work for them to do.

If your business goes through "feast or famine" cycles, keeping people on the payroll when work is slow can be stressful. Facing the prospect of laying off employees is also unpleasant and a further source of stress and distraction.

By outsourcing work during "boom times" you can extend yourself further, but can cut back on use of contractors or freelancers when times are more lean.

6. Outsourcing gives your business flexibility.

If you decide to take your business in a different direction, you will have to retrain your employees, or worse, go through the process of laying off some employees and hiring others.

With outsourced workers, you can simply hire different contractors or give your contracting agency new specifications for what you want.

7. Outsourcing reduces your risk in hiring a new employee.

When you hire someone, you not only go through the time and expense of the search, interview and onboarding process, but you still face the chance that the new employee might not work out. This leaves you in the position of having to let that employee go, and then repeat the hiring process.

If a contractor is not satisfactory, you are obligated only for the terms of the current contract, which can be as short and sweet or lengthy and complex as you negotiate up front. When hiring through a contracting agency, you can simply request that they supply a different individual if one person is not working out.

8. Outsourcing can allow you to "audition" potential full-time employees.

If you eventually want to hire full-time employees, outsourcing can allow you to temporarily hire a person and if they work out, offer them long-term employment. When going through an agency, you can specify that you are seeking contractors for a "temp to perm" situation.

This gives you the option of making a job offer to a desirable employee without obligating you to keep one who is not satisfactory.

Many experts believe that we are shifting to a contractor or freelance economy in the long run, where most people will hire out their labor on a job-by-job basis rather than working full time and long term for one employer.

Certainly more people are striking out on their own and working for themselves as freelancers, and it is possible to outsource more jobs and functions all the time.

As a small business owner or solopreneur, outsourcing your needs to freelancers, temporary employees, or contractors is not only more feasible than ever, but makes economic sense in these times of running businesses as lean as possible.

by on October 24, 2014

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