As a new financial year begins for many, employers face a higher wage bill. With many companies already operating on tight margins, these increases can be hard to afford. Yet, skills and experience are essential to maintain operations. As a small business, I have built a virtual team of professional and trusted contacts. I know I can’t do it all, so the option of outsourcing enables me to flex. If you are new to outsourcing, this article can help you decide if it is a viable way to cut employee costs without compromising services.
Employment legislation increases employee costs
In many companies, salaries are the greatest expense. Yet, monthly wages are not the only cost associated with hiring permanent staff. As an employer, you need to fund recruitment, make pension contributions, pay for holiday leave and invest in training.
In addition, you need to pay National Insurance contributions, statutory sick pay and maternity/paternity leave. As we hit April, all of these costs went up, along with the National Minimum Wage. These changes impact every company from micro businesses to large corporations. In preparation, many have announced recruitment freezes and redundancies to curb employee costs.
If you are considering outsourcing as a way to reduce employee costs, take a look at this cost calculator. It helps to compare employee and freelancer costs.
Is outsourcing the answer?
Mary Poppins is practically perfect in every way but the rest of us can’t be great at everything! As time is limited, it’s best to focus on areas where your skills lie and then engage specialists to work on other tasks. I find it a weight off my mind and it takes them a lot less time. It’s also helpful to know there are reliable people to call on during busy times.
So, what are the benefits? Firstly, when you hire a freelancer to undertake a particular task or project, you only pay when they work for you. There is no holiday or sick pay and they are responsible for their pension and National Insurance contributions. What’s more, they usually provide their equipment and work remotely. This means minimal overheads.
Secondly, outsourcing provides greater flexibility than an employee. You can find the best match of skills and experience for your immediate requirements. What’s more, you can negotiate the hours of work and the timeframe, so you don’t pay for more than you need.
Thirdly, freelancers are used to hitting the ground running. As business owners also outsource to me, I see things from both sides. I know that any business support service needs to deliver results to survive. That motivates me, and others, to do a great job and ensures you get good value.
You could outsource any service. The obvious things though, include: bookkeeping and Tax/accounts preparation; IT & tech support; Website development & maintenance; Social media management; Email and calendar management; Travel planning and event management; And of course document services like those provided by 3 Doc Solutions!
What are the downsides to outsourcing?
Of course, there is a flip side. Outsourcing is not a way of engaging a full-time team off payroll. To avoid the risk investigation for tax avoidance. Get familiar with the IR35 Rules if you aren’t already.
It’s also worth remembering that freelancers work for multiple companies, so your business is not their only priority. They may not always available to attend a meeting or jump on your request at short notice.
One of the biggest challenges surrounding outsourcing is building trust and retaining control. Shifts in our perception of the workplace mean remote working is more widely accepted than ever. It’s now recognised that we don’t need people in the office to effectively manage them. Your organisation may already use project management tools, such as Asana, Trello or Airtable, to allocate tasks and track progress, you might find a simple spreadsheet tracker would work perfectly for you.
GDPR & access control
I think it’s also important to raise GDPR as a potential issue. It might be cheap to hire freelancers from across the globe, yet not every country has the same data security standards. So, how can you control personal information and intellectual property?
My advice is to ask about their setup, do they have secure internet and malware protection? Make sure they have ICO data protection certification. Also, ensure you have access controls on all sensitive documents to limit who can open and read them. This is good practice for internal teams but is especially important when outsourcing.
Documents when hiring freelancers
If outsourcing has potential, I have a book recommendation, How to Work with a Virtual Assistant: Outsource Everything but Your Brilliance by Kathy Soulsby. This outlines everything you need to consider and is relevant when working with any business support provider, not just VAs.
As a document specialist, I also want to flag up some paperwork to clarify and agree on working expectations. The following documents are not a legal requirement but can be beneficial:
Request for Proposal – a business document outlining the project brief or role and what skills and experience you are seeking. It provides the scope and schedule along with the goals and how these will be evaluated. Interested freelancers will respond with a tailored proposal.
Non-Disclosure Agreement – with your decision made, it is advisable to ask freelancers to sign an NDA. This confidentiality agreement confirms no information will be accessed, used or shared beyond the parameters of the project. You might also include exemptions.
Statement of Work – with the NDA signed you can discuss the project or role in greater depth. The Statement of Work documents the agreement. This can include objectives, processes, milestones, budgets, resources and management.
Service Level Agreement – alongside the Statement of Work is an SLA. This focuses on expected performance standards and how these will be measured and assessed.
Collectively, these outsourcing documents clarify understanding and provide assurances.
Branded business documents
If you are new to outsourcing or haven’t previously used documents, I can assist. It’s all part of my professional document support services!
Let me produce branded Word templates for your company. These can include standard introductory sections about your business, customers and company values. Then, you simply need to complete the sections with specific details relating to each project or freelancer.
To find out more or discuss your requirements Get in touch.
I’ve found outsourcing a valuable resource for my business, is it the future for yours?