Outsourcing was designed primarily as a cost management strategy. Companies that outsource average 40% reduction in the cost of operations which translate to higher savings or increased investments in core functions. Outsourcing works by capitalizing on comparative cost advantages and economies of scale that are available in the region. Since the advent of the new millennium, the idea of outsourcing has evolved from a purely cost-management strategy to a strategic partnership because of its ability to institute improvements in revenue generation.
Any business, regardless of size or scale, will benefit from outsourcing services. This is especially true if you own a small business with tight budgets and limited access to capital. As a small business owner, you have to manage your costs in order to keep operations funded. Having tight funds will make it difficult to implement expansion programs. The focus of small business should not just be on cost reduction but on increasing savings as well. The best solution for small business owners is to outsource services to a virtual staff.
Here are five benefits of outsourcing services:
1. Lower your costs. Virtual staff is comprised of people who work online usually from a remote location and are contracted to provide services or manage a specified project. Virtual employees are paid on average $7 to $10 per hour depending on skill and experience. Those who are from remote locations such as the Philippines and India will cost lower at $4 to $7 per hour. Virtual employees are essentially freelancers; they can work for anyone and are not exclusive to your campaign even after you’ve hired them. Thus, they are not entitled to benefits. By comparison, a regular office employee will cost on average $20 per hour and are entitled to government and company mandated benefits. The estimated cost of a regular employee including benefits is equivalent to one-and-a-half times the basic salary.
2. Increase productivity. Hiring a virtual staff will increase your productivity because they are paid based on productive hours worked. Productivity can be measured on the tasks accomplished or on benchmarks established by the client. Regular office employees get paid for the entire eight-hour shift whether it has resulted in productivity or not. According to a study by Personal Development Coach Steve Pavlina, the average office worker only generates 90 minutes of productive time per day. The rest of his work hours are spent unproductively such as Internet surfing, chatting with co-workers, social media and taking coffee breaks.
3. Improve flexibility. If the members of your virtual staff are all from remote locations, this gives you an opportunity to have your business managed more than 8 hours per day. For example, a client from Canada who contracts a virtual assistant from the Philippines can designate a morning work shift Manila time. This way, the Filipino virtual assistant can handle all calls, messages and inquiries that come to the attention of the client after office hours in Canada. By having the after office hours covered, you can be assured your business will not be at risk of missing opportunities and inquiries can be attended to right away.
4. Buys you time. For business owners, time-management is a must. You should be able to attend to essential tasks or those that are directly related to the conduct of your business. But at the same time, you need to address administrative matters as well. Although defined as non-essential, administrative tasks lend organization to the business and must be regularly updated. Administrative tasks include e-mail filtering, phone handling, CRM work and calendar management among others. A virtual staff can have this covered and done expertly. In the meantime, you would have the availability to work on matters that deserve your attention and require your core competence.
5. Better quality of work. The virtual assistant has come a long way since being hired primarily for secretarial or personal assistant services. Nowadays, the scope of virtual assistance work covers a wider range of skill and required higher levels of competence.
An ideal virtual staff for a small business owner should cover the following functions:
- Administrative work
- Website management
- Social media management
Incorporating this set up ensures your business has adequate support services and a team that markets and promotes your services.
Outsourcing services to a virtual staff will result in greater profitability for your business because of both increased cost management and revenue generation; the variables in the profitability equation are effectively addressed.