How Does Outsourcing Fit Into Modern Business?
Though we’re slowly pulling out of the recent global economic crisis, small business owners have it tough at the moment. Because customers are making cutbacks, demand for products and services is low, and because suppliers are making cutbacks too, manufacturing costs are high. All this creates something of a downward spiral situation for the small business owner struggling to keep his or her head above water. Increased production costs and reduced demand means that to operate at a profit, a company’s wares must be sold at a higher price, which reduces demand, which increases manufacturing costs…You get the idea.
In recent years the business has become globalized, which in turn means that competition has globalized too. Many small businesses that may once have occupied a local niche are now forced to compete with similar businesses all around the world. In some cases, this presents a costing problem; labor can be cheaper, yet equally skilled in countries outside of the Western world. Many Western-based companies find that they are being outbid for projects simply because far greater staffing costs mean that they cannot afford to bid low. Outsourcing enables such companies to procure the staff they need at a competitive price and, more importantly, as demand requires them rather than hiring them as full-time employees. cruz clothing
In being able to call upon a workforce of outsourced freelancers, the small business is then able to dynamically scale itself to fit the needs of any project. Traditionally, the first consideration when tendering for a new project is that of resources: Does the company have enough resources on hand to tackle the project in the timeframe required? In some cases, the answer would be no, meaning that small business would have to turn down an opportunity and lose out to a competitor. However, if the company has access to a readily available team of outsourced staff, this problem disappears; the business simply uses freelancers to make up the shortfall in resources. The small business is able to take on the additional work, safe in the knowledge they can acquire the resources required to complete the project.
Let us consider another side of outsourcing: that of cost. Modern commerce is ever more competitive, which means that prices often need to be cut in order to maintain a market share against emerging competitors. If prices need to be cut, this means that logically, overheads need to be cut to maintain a healthy profit margin. Staffing costs are usually the major overhead faced by any small business. Reducing staffing costs is a tried and tested way of increasing net profit and using outsourced staff is a great way to tackle this problem. If handled correctly, the use of freelancers will provide a far more flexible workforce that is able to tackle more complex and demanding projects that require a greater diversity of skills.
What’s more, many outsourced jobs can be done remotely with just a computer and an internet connection. Your freelancers could be scattered around the world and yet make an essential contribution to your business without ever needing to step onto your premises. So go ahead, switch off all the lights – but leave the internet on.