Outsourcing: a light in the dark

22 10 2010

I was recently commissioned to write this article and have been given kind permission to publish it on my blog, so here it is!

Though we’re slowly pulling out of the recent global economic crisis, small business owners have it tough at the moment. Because customers are making cutbacks, demand for products and services is low, and because suppliers are making cutbacks too, manufacturing costs are high. All this creates something of a downward spiral situation for the small business owner struggling to keep his or her head above water. Increased production costs and reduced demand means that to operate at a profit, a company’s wares must be sold at a higher price, which reduces demand, which increases manufacturing costs…You get the idea.

To avoid increasing the price to customers, another route the small business owner could take is to cut costs in house. This might involve finding cheaper source materials, making redundancies or salary cuts, moving to cheaper premises or switching off all the lights to save electricity. Producing a lower quality product, providing a service less well, and having less capable staff to work with can in itself be damaging to a company’s coffers and its reputation. If only there was a way to reduce overheads, without damaging product production or service provision…

It turns out that actually, there is a way for businesses of all sizes to save money, and the best part is, it involves no loss of company skills, production can be maintained at the same level and quality it always was, and you can switch the lights off in your building without a single employee complaint. The answer is outsourcing.

Outsourcing has long been the preserve of large corporations, for instance the high street clothing retailer who hires factory workers in Thailand, or the electricity company who has a call centre in India (to answer all those complaints about the lights being switched off).  Now, thanks to the power of the internet, small to medium enterprises are now catching onto the idea of outsourcing as a means to reduce staffing costs without losing people numbers, quality or aptitude.

For a smaller business, moving the entire production outfit to a developing country probably isn’t a viable option, but outsourcing individuals or small teams to work for you on a freelance basis certainly is, and the range of niches that they can fill is enormous. Everything from website design and software development, to accounting, legal support, research assistants, data entry, secretaries and, famously on one freelance jobsite, even lion taming, can be outsourced to highly skilled, well qualified people who may be on the other side of your town, or the other side of the world.

Freelancers in low wage countries can certainly offer competitive skill sets at much lower prices than in the developed world, but even within your own country or even your town, the cost advantages of outsourcing are huge. Because freelance workers are self-employed, they are responsible for their own tax and social security payments, and you’re not obliged to provide employee benefits such as annual leave, sick pay or a pension plan. Freelancers are flexible; because they’re contractors rather than full or part time staff, you can hire them as and when you need them, rather than throwing money down the drain on retaining permanent staff when there’s nothing for them to do.

What’s more, many outsourced jobs can be done remotely with just a computer and an internet connection. Your freelancers could be scattered around the world and yet make an essential contribution to your business without ever needing to step onto your premises. So go ahead, switch off all the lights – but leave the internet on.

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