Outsourcing describes the process of one entity employing the services of another entity on an ad-hoc basis. This can take the form of one large company using a second company to provide certain services as needed, or it may simply be an individual who needs to procure a certain skill set to help complete a current project. Usually, these situations will take the form of the Employer engaging the services of Freelancers on either a pay-per-project or pay-per-hour basis. These Freelancers report directly to the entity that has employed them for an agreed duration either in time, or in project goals. Once payment has been made upon delivery of completed work, the Employer has no obligation to keep the Freelancer on the payroll. How does Outsourcing fit into Modern Business?
In recent years business has become globalized, which in turn means that competition has globalized too. Many small businesses that may once have occupied a local niche are now forced to compete with similar businesses all around the world. In some cases, this presents a costing problem; labor can be cheaper, yet equally skilled in countries outside of the Western world. Many Western-based companies find that they are unable to compete with international companies offering services at much lower costs. Outsourcing enables companies to procure staff at competitive prices and, more importantly, as needed rather than hiring full-time employees.
In being able to call upon a workforce of outsourced Freelancers, small businesses are then able to dynamically scale themselves to fit the needs of any project.
Small businesses often find they have to turn down opportunities due to limited resources, therefore losing out to competitors. However, if a company has access to a readily available team of outsourced staff, this problem disappears; the business simply uses Freelancers to make up the shortfall. Small businesses can therefore take on additional work, safe in the knowledge they can acquire the resources required to complete any project. There can be no doubt that a small business that is able to utilize Freelancers is more dynamic and able to adapt itself more quickly to the needs of its clients.
Key Benefits of Outsourcing:
So far, we have briefly outlined a handful of the advantages of using Freelancers. Let us now take a much deeper look into the full range of benefits that a small business can reap from taking an outsourced approach to staffing.
COST EFFECTIVENESS
As we have already seen, the emergence of a global marketplace – not simply in terms of commercial opportunities, but also with regards to staff employment – means that many traditional businesses are facing the problem whereby they are savagely undercut when tendering for new projects. Skilled staff located in a cheaper geographic location are now more relevant than ever before in practical terms. Most business is won on price and employing outsourced staff allows small businesses to attain price parity with competitors large and small.
ADAPTABILITY
For small businesses involved in industries such as web development, the need for skilled staff is always present. But what happens when a new client suddenly insists upon your team producing a set of instructional videos, or a Microsoft PowerPoint presentation? Do you say, “No, sorry, we don’t have the skills to do this”? By using outsourced staff to supply extra skills as required, the business is able to confidently take on more complex projects that require a range of different skill sets, safe in the knowledge that they will be able to find Freelancers to make up the skill deficit.
SCALABILITY
Staff can be employed on a demand-driven basis. Put simply, if you need eight staff one month and then only five the next, then you only need employ the right number of staff each month. This means that staff shortages become a thing of the past and, equally importantly, overstaffing is also no longer an issue. You only employ the people you need when you need them.
REDUCED RISK
As any company that employs full-time staff will be aware, the cost of keeping those staff trained in current industry technologies and other tertiary skills can be high. Outsourced members of staff are responsible for keeping themselves current and ensuring that their skills are kept sharp, at no cost to their Employers.
DIVERSIFICATION
By outsourcing to Freelancers, a small business is able to adapt its products and services and expand its product base by pulling in skills that it does not already offer. For example, a web development company may find it desirable to offer Search Engine Optimization (SEO) services as part of their overall package. By finding a good, solid Freelancer to perform this task, they are buying a skill that can then be resold to augment and improve the service offered to their clients.
REDUCED TRAINING- COSTS
As any company that employs full-time staff will be aware, the cost of keeping those staff trained in current industry technologies and other tertiary skills can be high. Outsourced members of staff are responsible for keeping themselves current and ensuring that their skills are kept sharp, at no cost to their Employers.
SIMPLIFIED ACCOUNTING
Small business that employ staff on the payroll must keep accurate financial records and ensure that taxes are paid on behalf of their employees. Freelancers however, must keep their own records and are liable for their own tax returns; the Employer does not need to handle this process income and so accounting is made much simpler. In addition it removes the need to employ payroll staff.
The points outlined above represent the major benefits of outsourcing, many of which are applicable to small businesses in a range of industries. Even smaller organizations or one-man operations must see by now how outsourcing can help them to maintain their profit margins and grow with their market, without the need to invest in more full-time personnel. Utilizing highly skilled, professional Freelancers gives businesses the option to employ the people they need only when they need them, without incurring an ongoing overhead.
Source: BAG Archive
