Why You Should Consider Outsourcing Within Your Business
Whenever the topic of outsourcing comes up, an immediate debate usually ensues: Should you outsource or not? What are the pros and cons? What are things you just shouldn’t even consider outsourcing?
The truth is, the debate will never be settled with a single answer. What’s right for one business might not be right for yours. However, with the increase of talented people engaging in the gig economy and the rise of a remote workforce, outsourcing for your business has rapidly become the norm rather than the exception.
For example, nearly every business needs IT services of one sort or another, but outsourcing IT management has several distinct advantages, including huge financial savings, increased security, and network privacy. Especially if your company is young and lacks employees with the requisite skills, outsourcing IT management rather than going to the expense of hiring several qualified employees is worthwhile. Outsourcing things like logistics offers access to expertise and technology that would otherwise be difficult to implement on a reasonable level for your company.
This is the case for many tasks. You may not need a graphic designer all of the time but just for certain projects. The same can be true for web design, SEO, marketing campaigns, and more. These are all tasks that can be easily outsourced. But what about more essential functions like HR and payroll? Here are some tips to making the right call in the right situation.
The Cost of Labor vs. the Advantages of Control
So let’s do a little bit of math before we go any further. If you have been in business for any amount of time at all and have employees, you know the true cost of labor is not defined by a simple hourly rate. Taxes, benefits, workman’s compensation insurance, and perks like gym memberships or other items all factor in to the actual cost of hiring employees.
If they also work on site instead of remotely, you must add the cost of a desk, chair, the real estate to house them, and any onsite perks you offer, like daycare or kitchen facilities for lunches and breaks. That employee you hired at $20 an hour is costing you much more.
The advantage of this situation is you have direct control over your employees. You can dictate what time they come to work, when they go home, what they wear while on site, when they take breaks, and what they do with the time they spend in the office. If the employee wants to work for you, they will follow your guidelines.
Outsourcing Pros and Cons
When it comes to outsourcing, costs are more straightforward. Either you pay a fee for a service such as HR or payroll services or you pay a straight hourly rate or contract rate to a freelancer. Either way, the other associated labor costs are absorbed by the person or company you contract.
The drawback is that you lose a certain amount of control. Depending on state laws, there are definitions for independent contractors, and if you violate those laws, you have to pay the person you have hired as an employee. If you contract with a company, there will be terms associated with the contract, and it is the only form of control you have over them. Altering the services they provide or how they do so involves revising the contract.
When this makes sense is up to you. Of course, outsourcing things like janitorial services might be a no brainer, but payroll or graphic design might be something you want a little more control over.
Communication Pros and Cons
Another key issue with outsourcing is communication. Internal communications and client-facing communications are both vital, and ensuring that everyone is on the same page is critical. However, when you outsource services, you deal with the communication styles of another company or individual. Here are some tips:
- Outline and agree on communication policies from the start.
- Insulate contractors from direct client communication unless absolutely essential. Otherwise, this can cause big trouble for both of them.
- Have meetings in person or via video. A lot of communication is nonverbal, and simply communicating via text or email can result in confusion or misinterpretation.
- Settle issues right away. Don’t let any disagreements fester.
- Listen more than you speak. There is often a lot you can learn from those you outsource work to.
The difference with an outsourced contractor is you cannot walk over to a desk and ask a question, since the individual is not in your office — but you can establish communication policies that work for both of you.
Remember, this relates to what you outsource. If a project needs constant two-way communication, you might want to keep it in house instead of outsourcing. Also, use modern business chat programs like Slack to communicate in real time.
A Larger Talent Pool vs. Cohesive Company Culture
The final obstacle to outsourcing is the preservation of a cohesive company culture. Even with remote workers, it is possible to maintain company culture through hiring processes and company policies.
With outsourcing, things are different. If you contract a company to work for you, they likely have their own company culture which may or may not jive with yours. This is not necessarily a problem, except that your employees may get one kind of feedback and tone from your outsourced company and another from you. This can result in confusion if you are not careful to make a clear distinction.
Freelancers are a different story. They often have an independence and culture they bring with them, and even if they are a sole proprietor, they have their own “company culture” shaped by their personality and the way they do business.
The advantage is that you have access to skills, talents, and technology you might not otherwise have access to, but the drawback is that your company culture may not extend to contractors. You can mitigate this by screening those you do business with for their philosophy and professional demeanor, then trying to ensure they align with yours as much as possible.
Outsourcing: A Great Option
Outsourcing is a good idea for a number of reasons. Not only does it save you time and money and give you access to talent and other technology and perspectives, but it allows you to focus on what you do best: running your business. When you decide to outsource, determine what will work for you and your company, and what tasks are better left to in-house departments.
This guest post was authored by Brooke Faulkner
Brooke Faulkner is a writer, mom and adventurer in the Pacific Northwest. She spends her days pondering what makes a good leader. And then dreaming up ways to teach these virtues to her sons, without getting groans and eye rolls in response.