The recent COVID-19 outbreak has put a quick halt to a ten-year bull market. Seemingly overnight, businesses have gone from planning an expansion to furloughing or laying off their employees. With budgets frozen and most professionals are now working from home, separated from friends and colleagues, how are businesses to respond?
Making a profit as a business can be a tough enough thing to accomplish in a competitive market, let alone one where 30.3 million people have applied for unemployment over the past six weeks. Those convinced that their new business is in the right industry may be startled to hear that even in a bull market, most companies don’t succeed. According to Forbes, 80 percent of new businesses don’t survive by their third year. To survive, companies must look for ways to save. One often-overlooked way to save is to outsource.
There are many advantages to outsourcing. But according to Growl Agency, a marketing agency in Grand Junction, Colorado, you should only deploy outsourcing strategically, keeping employees for tasks they excel at, such as locally focused client management and projects that require direct collaboration/communication. Outsourcing specific tasks, the ones that will save you money, will free up your employees to work on their projects.
Here are five reasons to consider outsourcing in uncertain times.
For many companies, providing things like health insurance and disability insurance is a very pricey proposition and one required by law. Most of the best talent in your industry might be drawn away from your business and head to competitors who provide better benefits. However, if you outsource certain business tasks, you can lower the amount you will have to pay for expensive benefits.
2 Training Expenses
The Association for Talent Development estimates that companies spend an average of $1,195 on each employee’s training. If you have a high turnover or your business is looking to replace underperforming employees, this cost can add up. However, when you outsource, you can save some serious time and money by not having to put each employee through a full training regimen.
3 Tech Support
Most companies require the use of complex computer networks to do work and store and analyze essential data. When this technology breaks, you need to have a full IT staff on-site to help troubleshoot and fix problems. However, IT professionals typically demand incredibly high salaries. In these uncertain times, consider outsourcing a cheaper tech solution that works with your business.
Note: certain countries, especially in Asia, are known for containing workforces in possession of a higher proficiency of technological expertise, as well as high performance and low delivery costs. For businesses with IT needs, then countries in Asia should be considered.
Brick and mortar office space can be costly, taking up a significant portion of total operating costs. Consider outsourcing some of your work to freelancers who telecommute. This should be a significantly less daunting leap after the world of business has demonstrated through the COVID-19 epidemic how seamless and effective telecommuting can be. Saving money on desks, chairs, and the space to house those employees could significantly impact your business’ ability to weather this current economic storm.
5 Employee Opportunity Costs
A company’s greatest resource is its employees. How those employees are used often determines the competitive advantages a company has. If you use your employees to perform lower-skill work such as data entry, payroll, or even janitorial tasks, you may lose some of that competitive advantage. Whereas, if those same employees focused the full force of their creative powers on something more significant. Outsourcing can be a great help when it comes to freeing up your most valuable employees and their time.
In addition to these reasons, a study from Forrester found that companies that do outsourcing save 12-17% in business expenditure as compared to paying for the same work to be done in-house. Though this number may seem high, when taking into account legal fees, federal fees, and the amount businesses pay employees in severance fees and local taxes, one can easily see where all of that savings comes from. However, this Forrester study does not take into account the lucrative cumulative discounts that long-term outsourcing deals usually have attached to them. This means that if your company is dedicated to outsourcing and ready to sign a lengthy contract, your savings could actually go higher than the 17% average. In this uncertain economic climate, cutting 17% of your expenses could mean the difference between keeping the lights on and closing up for good.
Though outsourcing may be a frightening prospect, now is a perfect time to be boldly proactive and cut the fat from your business’ operating costs wherever you can. Businesses that can adapt by looking for new ways to save will better survive and will have positioned themselves for success when the lights come back on.