Should You Outsource?

Joe Weinlick
Posted by in Career Advice


It's no secret: Companies that run things more efficiently without reducing quality save more money on the road to profitability. One piece to that puzzle is saving on the costs of retaining your workers. Thanks to technology and the massive gig economy, you can outsource your labor. Find out how to take advantage of this new business model.

When you outsource your labor, you're not doing anything new that hasn't been done before. Companies started outsourcing labor as a formal strategy in 1989, when larger firms turned to smaller niche companies to help with specialized and customized services. Outsourcing generally involves tasks and projects that are not a part of your core business.

Finding a person or firm in the gig economy is as easy as performing an online search. These independent contractors make it easier for your company to finish projects for you at a fraction of the cost of onboarding someone new, especially if you find a contractor that specializes in the kind of project you need to do.

Three Main Reasons to Outsource Your Labor

1. Reduce Complexity

Every time you add a new person to the team, it increases your firm's complexity. You have no idea how this person may change the dynamic of a team, for better or worse. When you outsource your labor, you keep your dedicated teams intact and at peak efficiency.

2. Overtime Rules

By the end of 2016, the Department of Labor mandates that all companies must lower the threshold that salaried employees who earn overtime pay. Small businesses and startups that struggle to meet this new regulation may face financial difficulties. It might be cheaper to outsource your labor instead of bringing in a high-paid employee that could be working 60 hours per week.

3. Added Costs

Employees cost money beyond just a salary. According to MIT, the average employee costs between 1.25 and 1.4 times the salary when you add on benefits, paid time off, health insurance and other perks. An employee with a $30,000 salary costs between $37,500 and $42,000. Hiring independent contractors reduces those costs substantially.

Three Questions to Ask Before Hiring an Independent Contractor

1. Can the project be done virtually?

If your project can be done virtually, from any location and on any computer, you can outsource the project. Administrative work, data entry, content writing, coding and graphic design can fall under the virtual work category. Contractors can share information with your team through the internet and cloud-based software.

2. Does the project require regular interaction?

If the task doesn't need a lot of regular interaction among team members at your office, consider an independent contractor. Video conferencing comes in handy when you need face time.

3. Can someone else do this work?

Business leaders know how to delegate tasks. If someone else can do your project better than you or your team, outsourcing might be the way to go.

There are plenty of people willing to do work as contractors; you just have to find them after you decide to outsource your labor. If it makes sense, outsourcing can save you plenty of money.


Photo courtesy of Stuart Miles at FreeDigitalPhotos.net

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  • Maurice S.
    Maurice S.

    Thank-you nacy

  • Nancy Anderson
    Nancy Anderson

    @Martha thanks for your comment. Outsourcing is when you hire "outside" of your company/country. Many jobs are outsourced. For instance, have you received any phone calls from recruiters? Terrible! You can hardly understand them. To save money, companies have outsourced recruiting positions to people living in countries like India because they can get them for a lot less than they could hire a recruiter here in the US.

  • Martha M.
    Martha M.

    What is outsourcing?

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