Outsourcing typically involves using freelancers or agencies to work on a contract basis for your business. With the dramatic increase in remote and office-less companies since the COVID-19 pandemic began, it seems likely that outsourcing will experience a surge in growth too. Now that the remote work and distributed teams model and technology have been tried, tested and verified, without geographical shackles confining employees and contractors to specific areas surrounding a business’s headquarters could well be a thing of the past.
Overheads & Geo-Arbitrage
One of the main reasons entrepreneurs and CEOs look to utilize outsourcing is a potential reduction in operating costs compared to hiring full-time employees. These costs can be further reduced when a company takes advantage of “geo-arbitrage.”
Geo-arbitrage is a term used to describe the process of taking advantage of the currency and cost of living between two or more countries or locations. For example, if you establish your business in the UK, thanks to the strength of the British Pound relative to the Philippine Peso, it’s often possible to hire a full-time, highly skilled freelancer or employee for around £400 per month. To hire someone with the same skillset and experience in the UK would cost at least three times that amount per month.
Thanks to the benefits of geo-arbitrage, reduced overheads and running costs, you will be able to undercut the prices of many competitors. For example, if you run a marketing agency and use a freelancer based in the Philippines to build a small business website, it might cost you roughly £250. Depending on which area you are located in, a client in the UK would expect to pay around £2,000 for a basic brochure website. This disparity between the cost of labor and the cost of the end product gives you the ability to make a substantial profit or undercut your competitors and offer a cheaper price.
With the ability to outsource overseas, you can not only reduce monthly costs in regards to wages and contractors’ invoices – you also don’t necessarily need to invest in an office. By working remotely and hiring remote workers and contractors, you can save a considerable amount each month on the cost of an office lease. Again, this can allow you to operate on a shoestring budget, which in turn can allow you to undercut your competitors.
Work Around the Clock
By hiring freelancers overseas, you can work with people who operate in different time zones. It is often helpful to have some of your team or extended team working in a different timezone. When freelancers or employees work in a different timezone, they can often work while you sleep. This can mean that work is completed and set up for you to review or work on as soon as you wake up. It can also mean that your business has 24/7 cover. For example, if you outsourced your website’s managed live chat and phone answering, you can provide customer service and a point of contact around the clock. You can drive sales or leads while you sleep and gain an advantage over your competitors, who typically will only be contactable during regular office hours.
Taking on employees is quite a commitment. Hiring can be time-consuming, and there is a lot of paperwork, red tape and taxes involved with hiring an employee permanently. If your business is seasonal, for example, it can be challenging taking anybody on full time as you’ll have to pay them a full-time wage all year round, even if your business is slow for six months of the year.
With outsourcing, you can pay people per project instead of per hour. You can hire people as and when you need them, and thanks to websites such as UpWork and PeoplePerHour, the process is straightforward.
You can mitigate risk and scale your business without permanently increasing your overheads by paying freelancers or an agency per task.
Work On Your Business Not in It
Outsourcing administrative tasks such as email filtering, phone answering and appointment booking to a virtual assistant can save you hours each day. Research suggests that unwanted distractions such as spam or sales telephone calls can sabotage our productivity. By using a telephone answering service and a virtual assistant, you can outsource administrative tasks and focus on the core of the business.
You can outsource your telephone answering to a company such as Moneypenny and have your very own, dedicated US or UK-based receptionist. Your receptionist will answer calls exactly like an in-house, full-time receptionist, but for a fraction of the cost.
You can also spend more time taking an overview of the business and working on it rather than in it. You can look to streamline operations and review procedures when you are not constantly taking phone calls, replying to emails and working on tasks that would be better dealt with by a specialist freelancer.
You’re Not Training the Competition
If you are based in the UK or the US and operate in a specific niche, employees will often leave your business eventually and take on a role with the competition. You can spend time hiring an individual and training them up, only for them to leave and go on to work for a competitor within a few years or even a few months.
When you hire a freelancer overseas, you do not have to provide any training, and if you do – for example, for a virtual assistant – it’s improbable that they will move on to work for one of your competitors.
There has never been a better time to take advantage of the opportunities that outsourcing can offer. Whether you work remotely or from an office, outsourcing can allow you to grow your business, work efficiently and undercut your competitors without sacrificing on quality. Whether you outsource a project locally or overseas, there are many benefits to enjoy as a business owner or CEO.
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