| Lots of information has been published on the benefits that
outsourcing bestows on small businesses but none really gets
skin deep into the exact savings that you can make through outsourcing.
|
If we strip it down to bare basics, outsourcing has
the following primary benefits for small businesses:
- Helps you to focus on your core revenue generating
business activities.
- Helps you cut down the cost of hiring, payroll, managing,
and maintaining in-house capabilities and infrastructure
for your non-core activities.
- Enables you to get a range of skill sets which is
hard to find in one single person. Hiring multiple experts
could be an expensive affair while outsourcing gives
access to a wider range of people.
- Eliminates the repeated training when an old employee
is replaced by a new one.
- Unless there is a long term contract with the vendor,
outsourcing gives the flexibility to change the service
agreement based on business needs.
- You get special advice from outsourcing partner on
improving business processes since the outsourcing partner
has a lot of experience in offering similar services.
It is true, that if you have in-house resources you can
communicate with them more easily and have greater control
over them. In-house employees sometimes can help on tasks
that require physical presence, but if the outsourcing
advantages make more sense for your small business then
it could be a more viable option and save you a lot of
money.
Basic cost savings:
If you hire a full-time in-house administrative assistant,
apart from the hiring expenses, your total fixed cost
may run up to an average of $3000 per month including
base salary, all taxes, benefits, office infrastructure,
and equipment. Actual work time or productive time of
an employee is around 100 hours per month. That makes
the real rate to $30 per hour.
By using right-shore outsourcing approach, you will not
only lower your hourly rate by 30 to 40% but you will
also have the flexibility of increasing or reducing your
usage time based on business needs and get to use a wider
range of skill sets.
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Summary of benefits over time:
Description |
Fulltime
back office assistant |
Outsourced
assistant |
|
Hiring and employee
retention challenges |
More;
since employees come and go and you deal with different
individuals, your hiring and retention challenges
increase. |
Few;
as you deal with your relationship manager of the
outsourcing service provider who employs only experienced
professionals and takes care of hiring and training. |
Time on core business |
Less; it takes away lot of your
time and focus since you are now managing employees
and your business. |
Less; a key benefit of outsourcing;
Helps you focus more on core business by taking
the employee issues out from your mind. |
Total Cost and Flexibility |
Total cost increases as employees
demand more salary and benefits over time and you
have less flexibility with bigger employee base. |
Although in some cases outsourcing
may sound expensive at the beginning but if you
take the Total Cost of operation over a period of
time, you will really see the difference. If flexibility
is important for your business outsourcing may be
the right option for you. |
Full utilization |
Surveys have
clearly suggested that an average employee spends
only 70% of his work hours for productive purposes.
This implies that you pay for his non-productive
work hours also. |
Maximum utilization as some virtual
assistants also provide you hour based costing to
give you the maximum possible benefit. |
Other issues like interpersonal
challenges, leaves, providing good work environment,
etc. |
Yes; you have to deal with all
these issues. |
Nil; work continuity under all
circumstances is offered by the vendor. |
|
For most companies, outsourcing has a clear edge over employing
a regular staff for back-office jobs. As this list is not exhaustive
you can add to them related issues or activities which you may
consider important and evaluate its comparative implications.
As these intangible overheads play a vital role in the overall
performance of your company, these aspects need your immediate
and strong attention.
Reports suggest that on an average, small businesses save around
40% of their costs by outsourcing their back-office tasks to
virtual assistants. So it’s time to get your calculators out
and start evaluating, you might be in for some surprises.
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