Why outsourced labor makes more sense than ever
Outsourced labor isn’t a new concept in business. It’s long been a tried-and-true method to help keep teams lean, tap into areas of expertise that cannot be held internally, or free leadership up to spend more time on strategic planning and decision-making.
But a few things today make a liquid workforce more critical than ever.
Why liquid workforces are important today
“Liquid workforce” was a term coined by Accenture a few years back.
Its premise lies in organizations adopting more digital technologies and better utilizing outsourced labor — such as freelancers, contract workers, or “as a service” providers — to be more agile and scale more cost-effectively.
Why is it so important today?
First, there are more small businesses today than ever before. As if there wasn’t already steady growth over a 15-year period, COVID caused an absolutely massive explosion in new business filings. That was primarily a result of folks being laid off or simply choosing a new direction in life. This means that today, there are plenty of new small-business owners still trying to understand where their time is most valuable and how to outsource best.
Second, hiring has become more challenging. The U.S. Bureau of Labor Statistics reported that there were 11.2 million available jobs nationally as of July 29, with 4.2 million employees quitting voluntarily in July. This means employers are currently devoting a lot of time, effort, and energy to hiring and securing replacements.
And third, there are more outsourced services available today than in years past. HR as-a-service, IT-as-a-service, and third-party logistics (3PL) are quite effective for businesses and have become commonplace. Freelancers or bill-by-the-hour experts are available in any category you can imagine too. This means business leaders can consider what tasks are best kept in-house versus managed externally.
Let’s talk through a few of the things you’ll want to consider if you decide to outsource.
When it doesn’t make sense
Let’s first play devil’s advocate. What reasons might there be for hiring full-time employees and keeping work internal?
For starters, outsourced work doesn’t eliminate work completely. Whether it’s a freelancer, agency, or software provider, a certain level of project management needs to exist on the organization’s end. Some companies have one single “vendor relations” point of contact, while others have varying employees responsible for interactions with each individual service provider.
Secondly, strictly from a cost standpoint, you’ll want to ensure you cannot perform the work in-house at a lesser cost. If the average full-time employee works 1,960 hours and is paid $32 per hour (according to the U.S. Bureau of Labor Statistics), then that’s around $75,000 annually. If you overshoot by 50 percent to consider overhead and benefits, that’s nearly $48 per hour. If a vendor charges $200 an hour, you’d only get 470 hours for that same labor investment. That’s 1,490 more hours that can be logged from the full-time employee.
Finally, there’s always the risk that outsourced resources cannot accomplish work at the same level of care or expertise as full-time staff members. A good rule of thumb is that any work related to an organization’s key differentiators or competitive advantages should be kept in-house. It’s too much of a risk to pass off tasks that are core to the brand promise — whether it be stellar customer service, speedy on-time deliveries, or killer product development.
When it does makes sense
Okay, now let’s discuss why and when outsourcing is a good idea.
First, hiring full-time employees is quite costly. According to the Society for Human Resource Management, the average cost to hire a single employee is almost $4,200 and takes up to 42 days. It costs another $1,000 or so for onboarding and training. This is a massive undertaking for the HR team, both in terms of budget and time.
Second, outsourced workers can be brought on, paced, paused, or scaled up and down much more easily than full-time hiring (and firing). It’s a much more agile model. This makes it especially appealing during seasonal spikes, special projects, or when there are new rounds of funding at play.
Finally, not all tasks warrant a full-time employee. If accounting work is mostly seasonal, or if IT requires only a few hours of support service each month, it doesn’t make sense to invest in full-time labor. Or perhaps there’s a particular skill you temporarily need, like website development. In these cases, it’s best to save on salaries, benefits, and overhead costs associated with full-time employees and instead lean on outsourced vendors.
5 services to consider outsourcing today
Today, every business effort can be outsourced. If you can imagine it, I’m sure there’s an “X-as-a-service” available online. There are even more freelancers ready and willing to take on the challenge, too. In fact, a quick search on LinkedIn shows more than 2 million workers have the keywords “Freelance” or “Freelancer” in their titles.
There are plenty of options available across the market and at varying costs.
Here are five specific areas that your business should consider outsourcing today for cost savings or to help scale more efficiently.
1) Virtual assistants
The role of the administrative assistant has changed considerably in recent years. Most obviously — with the remote nature of work these days — they no longer have to sit outside their direct supervisor’s office. In fact, virtual assistants are now available as fully remote outsourced vendors. They can help manage emails, calendar appointments, take notes, book dinner reservations, and more. This can be a game-changer for busy business leaders.
2) HR as a service
For smaller companies that don’t have regular HR needs, it might be best to look at an HR-as-a-service firm. These companies can take care of it all — for a monthly or hourly rate. This could include payroll, benefits, hiring, and more. By operating on an as-needed basis, it can help small firms cut the fat that sometimes comes with full-time HR staff.
3) Sales development representatives (SDRs)
Sales is more cutthroat than ever, especially in a post-COVID world where there’s more competition, less travel, fewer in-person events, and more social selling. Regardless of the digital environment — prospecting, CRM management, cold calling, and cold emailing continue to make up a bulk of salespeople’s responsibilities. Thankfully, with the help of outsourced SDRs, these often-time-consuming tasks can be lifted off the sales team’s shoulders. By granting direct access to a CRM, calendars, and email software, external staffers can send emails, make calls, log notes, and book appointments directly for internal sales reps.
Marketing is complex today. It’s no longer just about ads and media buying. It’s content management, demand generation, social media, event planning, PR, sales enablement, landing-page design, sell sheets, lead intelligence, and more. For most organizations, it doesn’t make sense to outsource marketing completely. However, specific tasks can be outsourced at affordable rates. Website development, search-engine optimization, and content creation are great examples. These tend to be time-consuming and/or require niche skillsets, so they are usually a good bang for an organization’s buck.
5) Customer service
Digital and social media have changed how we interact with each other and how we interact with brands. Hootsuite says that more than 65 percent of customers prefer to contact a business via messenger over a phone call. If a company isn’t taking social media seriously as a channel for customer service, it’s long overdue. With every channel added — from LiveChat to Facebook to LinkedIn to TikTok — there are more lines of communication open that need to be managed. It can be helpful to outsource this work, as long as outsourced staffers are well-trained on how to best engage and best serve customers.
Embracing a liquid workforce — one that’s more reliant on outsourced labor — can be a strategic business decision that leads to both short-term and long-term gains. It’s especially appropriate in today’s work environment, where hiring continues to be a struggle for many types of industries and roles.
Take the time to balance the benefits of keeping talent in-house or relying more heavily on outsourced vendors or freelancers. From business intelligence to research and development to equipment technicians, there are plenty of reputable options available in the market today that you can tap to offset business challenges.
Make the decision based on your needs and costs and start working toward a better blend of internal versus external labor for a more-efficient workforce.
Thomas J. Armitage is team lead at Site-Seeker, Inc., a Utica–based digital-marketing firm. Contact him at firstname.lastname@example.org.