Profitable Staffing Option

Outsourcing is a popular form of employment that utilizes independent contractors, either individuals or companies, who handle specialized functions or tasks that your own personnel cannot., or you choose for them not to do. In a time of turmoil and changing business conditions it is a very effective strategy.

Outsourcing may mean you send work outside the business to be done off premises. Or, it may mean hiring an individual (an independent contractor) or a company to come into your business and work on a particular project until it's done (similar to hiring a temporary employee). Either way, these employees work short term on specialized projects that you do not have the skilled or experienced personnel to handle. You do not pay for sick days or personal days; you do not give them medical benefits or cover them with social security or unemployment insurance. You pay them a set fee for a specific job period. This allows your business to expand its capability to do tasks and projects that are infrequently needed.

According to a study by Coopers and Lybrand reported in the Sacramento Business Journal, "More than eight in ten of America's fastest growing companies now contract out some portion of their day to day management. For years personal computer companies have been masters at outsourcing manufacturing. It might surprise you to know that many computers have been created and assembled by a virtual army of individuals not employed full time by the company. Large organizations like IBM, Compaq, and Hewlett Packard have found outsourcing an excellent strategy; smaller businesses are now joining this movement.

Coopers and Lybrand recently surveyed the 392 fastest growing companies in the United States concerning their use of outsourcing. The following are the percentages of usage by these companies:

Not listed in this survey are three functions that many small to medium businesses also outsource:

Especially in smaller businesses, it is much easier to hire an outside expert to do a project than it is to hire an employee and teach him or her how to do the project. Outsourcing provides a better quality output product at a more reasonable price, and usually requires less management effort to ensure it is delivered. At the Outlaw Group we have helped a number of companies by providing outsourced sales and sales management coaching.

The dive behind the popularity of outsourcing is its positive impact on the bottom line. Savings are accrued not just from reduced wages, but are generated by eliminating the additional cost associated with employees. For example, if a particular job is outsourced, the company does not have to provide office space, utilities, telephone, or provide equipment for getting the job done. This helps you increase margins, reduce expenditures, and improve operating performances. The economics of hiring out for expertise has made outsourcing a hit. According to the Mississippi Business Journal, one ad agency saved fifty to seventy five thousand dollars per year through outsourcing because they didn't have to pay for more office space, staff salary, and benefits.


Advantages of Outsourcing Over Hiring
There are a number of reasons you might consider outsourcing instead of hiring an employee:

Disadvantages of Outsourcing Over Hiring
As with anything, there are inherent disadvantages to outsourcing:

Making the Advantages Outweigh the Disadvantages
Those who have used outsourcing successfully have learned that managing non employee resources requires special techniques. Even though you probably are not writing up