Outsourcing and freelancing are becoming a Big Thing. But while there are some solid reasons why outsourcing can be a great option for start-ups, it’s not without its downsides.
Top Three Outsourcing Pros
Outsourcing tasks gives you the flexibility to have them completed when and where it suits you, at a price you can afford.
There may be tasks that requires expertise and time you don’t have, such as book-keeping, accountancy or web design, tasks that are too intermittent to warrant employing someone, or tasks that require time and attention you don’t have (or could better spend on something else), such as admin or answering queries.
Sometimes, recruiting an employee can be the right answer. But with your new status as an employer comes a host of employer duties; recruitment laws, registration, insurance, various health, safety and equality duties, payroll and the legalities of sick leave and maternity pay.
Outsourcing tasks to freelancers or other companies frees you of these duties. You don’t need to worry about how much annual leave these workers have left or whether you got their tax code right on their last payslip; that’s down to them.
I’m afraid those pesky members of staff aren’t cheap to employ, either. You must adhere to the law by paying the living wage – and you may have to pay well above that to get the right employee. And the costs don’t end there.
Sick leave, holiday and maternity leave; a well lit, adequately heated and ventilated workspace; the supply of work equipment, chairs and desks etc.; and a place for staff to have a break away from their place of work (a must, as this is a legal requirement). It all adds up.
But when you outsource tasks, although you may pay freelancers a little more than employees, the onus is on them to have their own workspace, equipment and furniture.
They pay the energy bills that keep their office heated and well lit; the cost of the water, the teabags and the coffee, the phone line, the Wi-Fi, the software – all down to them. They also take financial responsibility for those times when they’re unable to work (something to bear in mind when considering their rates).
Top Three Outsourcing Cons
Lack of Communication
If your employees are just a few steps away, it’s easy for both parties to communicate regularly about work and how it’s going – and those conversations in themselves can spark more thoughts and comments that help to ensure you’re all clear about what needs doing, when it must be done by and how it should be done.
Take away that ease of communication and it becomes something you must work at, particularly if you’re not only missing out on the body language and facial expressions of your employee, but their tone of voice too.
Instant messaging and emails aren’t the best way to convey tone or the finer details. You’re also dependent on your freelancer answering your mails and phone calls or contacting you when agreed or required; if communication stops, there may be little you can do.
Lack of Loyalty
Companies or freelancers you outsource work to may not feel the same sense of investment in your business that an employee would. Most employees have at least a vague awareness that their efforts are contributing to the survival and profitability of their firm, and a vested interest in rooting for the company to succeed; they want a good salary, the chance of a bonus and the security of continued employment.
If you recruit wisely, those you outsource too should provide a professional service and a dedicated attitude. But they’re unlikely to work unpaid overtime, take late night calls or do an absent staff member’s work on top of their own for nothing – unlike an employee. Nor are they likely to accept a drop in pay to keep your work and help your business recover or get on its feet.
Lack of Discipline
Although wise recruitment should help ensure this isn’t a problem, you may come across companies or freelancers that persistently let you down, either in the quality, quantity or timely delivery of their work.
Of course, just like your employees, those you outsource to are human beings. They will have bad days, equipment failures, illnesses and crises just like the rest of us. But a website that constantly crashes, a remote PA who is persistently abrupt with clients or an accountant who bungles your tax return and brings down the wrath of HMRC will add to your stress, vacuum up your time and potentially cost you money.
You can’t closely oversee the work of remote freelance employees and contractors, and you don’t have the back up of a formal warning system – referral to the terms of your contract with them is your only recourse, up to the point where you decide to outsource your work elsewhere.
Outsourcing can be a powerful business tool, but you need to go into it with eyes wide open, realising that it may take awhile to make it work for you.