Considering outsourcing? Read this first…

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As every business owner will eventually discover, there comes a point when the number of tasks to be completed outweighs the time available to do so. No matter how organised and motivated you are, it is an inescapable fact that you are restricted by the number of workable hours in a day.

Spending two hours a day answering emails or one day a week preparing invoices for customers, may not be the best use of your time. So what’s the answer? Well perhaps it’s time to consider outsourcing some of your workload to other people.

Thanks to the internet and the rise in popularity of cloud-based workrooms and storage systems that can be accessed from anywhere in the world, almost any task can now be outsourced. There are plenty of highly experienced freelancers registered online at outsourcing platforms such as UpWork, who are willing to work for reasonable rates and take some of the more time-consuming jobs associated with business administration off your hands.

However, as with everything, there are both pros and cons, which must be considered before deciding which elements of your business are suitable for outsourcing.

Outsourcing vs. employing staff
Before you start planning an outsourcing strategy for your business, you should think carefully about what positions you need to fill, and what kinds of jobs are typically outsourced.

It is worth considering that generally you will have more control over full-time employees than contractors and freelancers, because they are committed primarily to you and your business. With freelancers, you could end up competing for their time with other clients.

The biggest issue with taking on employees is that they become a fixed cost to your business and you may not be able to fully utilise them on a full-time basis, whereas when you outsource you can manage your expenses in real time and adjust terms in line with your needs in a way you can’t with permanent employees.

If you are considering outsourcing for your business, you will also need to make sure your insurance covers it. Check your professional liability insurance policy to ensure that as well as employees, independent contractors are covered for any claims arising from business-related activities they perform on your behalf.

Here are some of the outsourcing pros and cons:

Pros
* Reduced costs foreign labour can be cheaper than domestic labour, pay for hours worked, rather than a permanent employee contract
* Globalise your business – working with freelancers based in different time zones will allow your business to operate outside of normal hours
* International element: utilising freelancers from different countries or those with language skills can provide you with a greater reach and understanding for your business activities overseas
* Access better technology and specialised expertise – no need to send employees to expensive training courses or purchase the latest software, when you can outsource specific jobs to experienced small companies and individuals

Cons
* An employer/employee relationship where trust and loyalty is nurtured can be harder to achieve
* When working with freelancers whose first language may not be English, it is easy for messages to get lost in translation. Also, there may be cultural differences to take in to consideration.
* When it comes to technology and working online, sharing information with non-employees can pose security risks, so you should ensure you are fully covered legally with NDAs etc.

Outsourcing definitely has some advantages. However you need to carefully consider all pros and cons before deciding if it is the right fit for your business.

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Kate Ritchie
Kate Ritchie is a strategically focused Principal Lawyer and Trade Marks Attorney with both commercial and business services and legal experience. Kate founded Ethikate in 2014 with a passion for providing specialist advice and services in Intellectual Property Law, Trade Marks and Brand Protection Strategies, business and commercial law and entertainment and media law for start-ups, entrepreneurs and small to medium businesses.

4 COMMENTS

  1. Thanks for the information, Kate. We are at the point of taking on our very first employee after outsourcing and contracting as needed over the last two years. Exciting and scary in equal measure, but we need someone that will project the values of the company as we grow, rather than just do the work. …Jane

    • Great to hear from you again Jane! Taking on your first employee is a huge step. Wonderful to hear you are ready to move from contracting staff and outsourcing and jump into taking on a full-time employee. What other kind of articles would you like us to cover while you make this big step?

    • It’s a big step and I can personally relate. Spend the time to find the right person who reflect your values, make sure you get them set up correctly with a reliable payroll system and make sure you have a solid contract.

      Good luck!

  2. Thanks Kate, this is so valuable right now. Listing the pro’s and cons is a useful reminder!
    Next up – a pros and cons from a risk/tax perspective of contracting vs. permanent employee?

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