Benefits of Outsourcing

As an start-up entrepreneur, your first instinct may be to do everything yourself and save money. A penny saved is a penny earned, right? Wrong.

In fact, some forms of penny pinching can be detrimental to your business.  The wise reinvestment of resources, whether it is time or money, is key to the prosperity and success of any endeavor.

Just the time time required to learn every new skill related to your business detracts from the time you could be using build your business and generate real income.

And then there are those tasks which are so affectionately referred to as “grunt work.”  “Grunt work” could be defined as simple, often repetitive, often time-consuming, but necessary work that can easily be taught and assigned to another.  At a most basic level that means labeling envelopes, writing articles, submitting websites, or any one of millions of small or large jobs that may apply to whatever business you are operating.  But at a higher level, grunt work can include more advanced skills such as coding, web design, graphics, writing, and so on.  Think about it – if you were the CEO of a web design company with hundreds of clients, would you personally sit and design and code every website that the company produced?  No, you would spend your time running the company, planning, strategizing your next marketing campaign, developing a new service, etc.  If you attempted to personally design every website for the company you would soon reduce your organization to the size of a small freelance operation and only service a few clients at a time, thus drastically reducing your income.

Long story short, if you truly want your business to grow and expand, then chances are very high that you’ll have to hire out work at some point.

Hiring full-time employees it not necessarily the best way to start off however.  This is far too expensive, you may not have enough work for one person to do full-time, and you will have to either hire several employees who know different fields, or find a jack-of-all trades.  Not to mention the additional costs, benefits, insurance, taxes, obligation, and paperwork that is involved in hiring employees. Especially in the beginning, outsourcing is far superior to taking on full-time employees.

Benefits of Outsourcing

Some of the benefits of outsourcing include:

  1. Higher quality. Hiring a professional painter, for example, will result in a better end result than doing it yourself, unless you happen to be a professional painter. They’ve trained and practiced for years, so why not let them do the work?
  2. Specialized services. When you outsource, it’s possible to choose people for part time or as-needed work, whom your business could never keep on hand full time, meaning you can provide higher quality service to your clients.
  3. More time. You don’t have time to do everything yourself, it’s rare that any entrepreneur does, in fact. Letting others take over the smaller jobs means you have more time to focus on more important matters – planning, research, marketing, and strategy, to name a few.
  4. Save money. Yes, you actually save money by letting someone else do something for you. Take article writing for example. If you make $40 an hour and it takes you that long to write an article that you could be outsourcing for $5, $10, or $20 . . . you will save money by making much more while someone else does the job for you.
  5. Lower overhead. Running a company with physical offices can be extremely costly since you’ll need to provide office space, cover utility bills, purchase equipment such as computers and furniture, and so on.  When you outsource to freelancers or independent contractors, those expenses are eliminated.
  6. Flexibility. When you hire on an as-needed basis, you don’t have to worry about covering payroll if you have a slow month.  And if you have a high-traffic-volume month, it’s relatively easy to hire extra help to handle the load.  You certainly don’t have to worry about laying people off only to hire them back when business gets going again. Outsourcing allows you to hire out as much or as little work as you need done, with neither waste or scarcity of resources.
  7. Expand your business. It’s easy to expand when someone else is taking care of the details and grunt work, so all you need to do is work on the key aspects of your business – such as research, strategy, planning, quality control, service development, marketing, and so on.

Of course, time and care is required in choosing your outsourcers, testing new people, retaining the best, and even training them in additional skills.

Make certain to test the skills of the person you’re thinking of using on a lower-priority project before trusting them on anything sensitive.  For example, I generally try to assign tasks regarding my own websites, so that I can see how a new outsourcer will perform, before I assign them to work on client websites.  In a pinch that isn’t always possible and that’s why it’s important to fully review the provider’s profile, reviews, skills, tests, and so on.  It’s also important to review samples of their past work.

Above all, make sure the person communicates in a rational fashion.  Ask a few questions and see if you get a straight answer.  If not, find someone else.  This will save more time and headache than you can imagine.  This could be the entire subject of another post.

It’s not worth outsourcing if the quality isn’t what you need, and it can take time to find, train, select, and build up a professional team who gets high-quality results.  But once you have done so, your efforts will repay themselves a million times over.

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10 Responses to “Benefits of Outsourcing”

  1. Dave Doolin
    March 14, 2011 at 9:43 pm #

    The key, as you say, is in the team building. And that’s a boat load of work. But worth it for the leverage.

    Especially since once you have a team together, it’s smart to keep them together, which takes even more work!

    There’s no way out! Aauggh!

  2. Anna
    March 15, 2011 at 8:25 am #

    Yes it does seem that way sometimes, doesn’t it! Boat load is right. Worth it for the long term, especially if you find good people who will stay with you. That is key as well.

  3. givejonadollar
    March 20, 2011 at 10:57 pm #

    I’ve always found the biggest challenge to be one of funds. Certainly, you can outsource if you have the money to do it, but I’ve been involved with so many startups that a couple of things happen.

    1. Not enough money to pay quality people.
    2. Not enough people coming to a website or buying a product to effectively outsource.

    A catch-22 indeed, but when you get to a point past the start-up faze, or if you can be really creative in your outsourcing, it is most certainly a plus.

  4. Dallas Realtor
    March 22, 2011 at 6:31 pm #

    I have built 4 websites and the first one I did everything, second I did everything but blogs and article submissions. 3rd one and this one I have done only the link building. I believe it is because I am a control freak and need to see what I am linking to.

  5. Adam
    May 24, 2011 at 4:18 pm #

    When the subject of outsourcing is brought up, a lot of people think outsourcing being something that happens overseas a lot because labor costs are cheaper. While this is a benefit of outsourcing, it is also great to outsource to different parts of the country. If you live in San Francisco, it is probably cheaper to outsource for services that can be done remotely in a place with a lower cost of living.

  6. John
    June 1, 2011 at 11:50 am #

    The reason I do most of everything myself is that I then know it is done to my standards. It is sometimes difficult to find quality outsourcing at a reasonable price. If I am wrong please let me know.

  7. Reihaan
    June 18, 2011 at 4:57 am #

    Well explained very well.. I think outsourcing is best when you need to reduce the over head and also the time. There out source works..

  8. uluru
    July 12, 2011 at 2:27 am #

    Good Post, Outsourcing is a great way to get the specialized people in less expenses.

  9. Erwin Tan
    October 5, 2011 at 1:31 pm #

    Outsourcing really works for me..

    But it’s not advisable for people who are just starting out with no budget to work with.

    It took me quite a while to outsource my projects back then. What’s more important is creating/finding a system that works/profitable, outsource those tedious time-draining tasks to your workers while you work on the important tasks. Works great all the time.

    Cheers! :)

  10. Anna
    October 26, 2011 at 10:15 pm #

    @Erwin – Yep. Correct sequence is important.

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