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4 Ways Small Businesses Can Save Money While Outsourcing

4 Ways Small Businesses Can Save Money While Outsourcing 41

Whether to outsource operations or keep them internal is a decision most companies face at some point. Outsourcing has the potential to improve service delivery times and fill in knowledge gaps. Naturally, managers and business owners consider working with freelancers or outsourcers to gain value. They want their companies to become more cost-efficient, not end up spending more than if they had kept things in-house.

With cost efficiency in mind, owners may be unsure about which functions or work to outsource. The expenses associated with enlisting the help of business process outsourcing firms or staffing agencies might also be intimidating. Then there’s the issue of who will manage quality control and whether the work will meet your standards.

Fortunately, there are ways small businesses can effectively use outsourcing and not spend more than their budgets allow. Here are four of them.

1. Look Globally

It’s a big step for small businesses to work with independent contractors and freelancers. You’re putting your trust in another person’s ability to produce work that represents your brand. You also want someone who can see your vision and align with your company’s values. Landing a highly skilled consultant or freelancer would be nice, but you also don’t want to spend a fortune.

That’s a tall order: one that sometimes requires looking beyond your city’s limits and country’s borders. With a little research and the use of online tools, such as international hiring guides, you can find global talent to meet your needs. You can compare average market rates, languages freelancers are likely to speak, and legal hiring requirements. You can also learn about local worker classification laws and how to legally hire international employees.

Depending on the country and your business requirements, hiring global employees rather than contractors may be a better solution. With direct hires, you’ll have more control over assigned work and still gain access to a broader talent pool. Whether you work with skilled professionals as contractors or employees, you’ll have local advisors for potential future expansions.

2. Perform a Cost-Benefit Analysis

To determine whether outsourcing is worth your while, carry out a cost-benefit analysis. To do so, you’ll first need to identify which tasks or functions you might want to outsource. Usually, these areas involve responsibilities your business isn’t set up to handle or functions you’re not skilled at.

Maybe there’s only one person to tackle everything that falls under the marketing umbrella, but they lack graphic design and website skills. Your business needs a website pronto, and without outsourcing, it’ll take months to get your marketing person up to speed.

A cost-benefit analysis will outline the costs and benefits associated with outsourcing different responsibilities. Some variables may start out as intangible or qualitative. For example, outsourcing some routine tasks may enable you to increase meaningful work or professional development opportunities for your team. To ensure a fair and balanced comparison, try quantifying the value of each item.

For instance, giving an employee more meaningful work might prevent turnover. You can assign projected turnover costs to that benefit. Likewise, developing an employee’s skills could involve a short-term investment that saves future expenses. Estimate those costs based on market data and compare them to what you’ll save and gain by outsourcing. Then back up that analysis against the company’s goals and needs to determine the optimal path.

3. Negotiate Rates and Contracts

Working relationships with independent contractors and outsourcing firms begin because they have the skill your business needs. Yet it’s difficult for both sides to predict whether the relationship will be beneficial and long-lasting.

Asking for a portfolio or work sample is a standard way to assess things upfront. Contractors get a sense of whether they’ll sync well with your business and requirements. Owners gain a preview of the quality of work they can expect to receive.

Provided each side is comfortable moving forward, negotiating rates and contract lengths is a way companies can save money. Freelancers and outsourcing firms tend to value long-term, steady assignments over short-term gigs. Many will be open to charging a lower rate in exchange for a longer contract. You might also get a volume discount if you farm out several functions or lines of business to one contractor.

Ongoing contracts provide other cost benefits, such as eliminating the need to train or educate someone new. You don’t have to place ads to find another contractor or spend hours searching professional social media sites for candidates. Narrowing down a candidate list, interviewing, and evaluating sample assignments all translate to lost time. That’s time a contractor already familiar with your preferences would have used to get the job done.

4. Start Small

You don’t have to outsource an entire department to work with freelancers and consultants. Small businesses often realize cost savings by testing the waters with repetitive tasks or responsibilities that are overburdening internal staff. Examples include managing social media sites, payroll, and online content creation.

Another way to approach this is to look for recurring work that fluctuates in volume. Do you have an assistant who’s also crafting occasional emails to clients and leads? Or an employee with non-core duties that sometimes compete for their time and focus? Engaging the help of a freelancer who specializes in those tasks will let employees concentrate on their primary responsibilities.

By using contractors, you’ll stop overstretching your staff or assigning tasks that may not fit their main skill sets. Your business may get a higher-quality result and can align spending on contractor fees with work volumes.

Conclusion

Outsourcing doesn’t have to turn into a huge expense. Like larger firms, small businesses can gain the skills of independent contractors and realize cost savings. Working with global talent, performing a cost-benefit analysis, negotiating well, and starting small are ways to keep a rein on expenses. After all, why should big organizations be the only ones benefiting from contractors’ expertise?

This is a Contributed Article.

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