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Businesses Have Little to Fear from Outsourcing

– Contributed content –

Network illustration

(Gerd Altmann, Pixabay)

27 Jan. 2020. Small businesses and start-ups outsource left, right and center to make up for their lack of resources and people-power, and yet somewhere along the lines between scale-up and enterprise, these very same businesses begin to develop an aversion to the very people who helped them to get this far. From a simple search of the internet, it seems that being fearful of freelancers is in fact a common phenomenon, but it is also one that could be harming many businesses, so is your fear our freelancing doing you more harm than good?

Why are businesses afraid of outsourcing?

In general, business outsourcing fears seem to fall into five key categories;

  1. Fear that the freelancer won’t be as good as an in-house employee would be
  2. Fear that the freelancer is not as driven by the success of the business as an in-house employee
  3. Fear that the freelancer cannot be trusted
  4. Fear that freelancers are more expensive
  5. Fear that freelancers can damage team culture.

These five categories are also conveniently all associated with some of the commonly cited disadvantages of working with freelancers, that you may not receive quality work, that they are unreliable, that you may have to fight for intellectual property, that you run into hidden costs and that you may not be able to manage them effectively.

Although these fears are all real and in many ways tangible, they are also largely avoidable if businesses choose who they work with carefully.

  1. Fear that the freelancer won’t be as good as an in-house employee would be
    This is perhaps the most common fear among those who have never used freelancers before, but is also surprisingly common in those businesses who have now grown to a stage where they perceive that the services they require are now too complex for a freelancer to complete. This is completely false. Freelancers aren’t one size fits all, there are solo-freelancers suitable for working on small, independent projects and there are also freelance agencies who can tackle even the most complex of projects just as well as an internal team can. Of course, there will always be horror stories about freelancers who have delivered poor quality work, but that’s just the nature of business and is most often associated with low-cost outsourcing when companies are looking to cut corners. To ensure that businesses receive the quality of work they want they need to research who they work with carefully, pay dutiful attention to testimonials and monitor the work of their freelancers closely.
  2. Fear that the freelancer is not as driven by the success of the business as an in-house employee
    When you stop and think about it, this fear is once again completely misplaced. To a freelancer or external agency, you are a client paying for a service and that is a very powerful motivator, perhaps even more so than the salary would be for an in-house employee. Freelancers and agencies work very hard to build up their client bases and as such tend to work for their clients with the same enthusiasm as if they were moving forward their own business and more often than not, especially in areas such as marketing, the digital marketing agency, will want the campaign to succeed just as much as you as the business owner does  Once again if you are worried about the motivation of the freelancer you are working with then manage them closely and carefully.
  3. Fear that the freelancer cannot be trusted
    As businesses grow, confidentiality and trust become very important and they are often tempted to try and keep projects inside This mentality can be damaging, and it’s important to remember that freelancers and external agencies are used to dealing with confidential information all of the time, in fact, they may be more used to it that many of your employees. If in doubt, ensure that some legal binding such as an NDA is also in place to cover your back and ensure to be clear about intellectual property rights.
  4. Fear that freelancers are more expensive
    During the early stages of a business, paying for solo-freelancers is an expensive but rewarding way to boost a small workforce. As companies grow these costs start to seem more unnecessary, but the real question is, are they? Third-party outsourced agencies and freelancers may charge a higher day rate than an employee but within that, they cover their own taxes, holiday and sick leave and quite often bring more niche skills to the table that can cost thousands for another employee to learn. What’s more, a freelancer or agency can be let go in a lean month and brought back on in a profitable one, ending contractual employment with an employee is not so easy. So the next time you think that paying for outsourcing services is your biggest barrier, do some math and see if it really is or not.
  5. Fear that freelancers can damage team culture.
    As companies grow and begin to develop their own internal teams they start to develop a fear that outsourcing areas of their departments could damage their team culture. Once again this is completely misplaced and at large comes down to how freelancers and agencies are managed internally. Thankfully communications tools such as Slack now make it very easy to communicate with teams and freelancers, even if they live on the other side of the world. Outsourced parties should also be introduced to the team and if you wish for them to be a part of your team culture then set this as a requirement from the start, just be aware that what can often be more damaging is a freelancer or agency suddenly disappearing. Team culture works both ways.

What do businesses have to gain from working with freelancers?

If it turns out that you’re not afraid of working with freelancers but you’re just skeptical of what they can bring to your business then read on.

Freelancers and agencies can bring a whole host of benefits to even the most established businesses, which is why they are growing in popularity. Some of the benefits include:

  1. Saving businesses money
    Regardless of size, overall, most businesses can save money by working with freelancers. Some of the cost benefits of outsourcing aren’t immediately obvious as you can expect to pay a slightly higher day-rate to cover the taxes and other expenses of the individual, however, this slightly higher day rate provides you with a flexible service that can be scaled up or down as necessary saving you money in leaner business months, and depending on where you source your agency or freelancer you may also be able to pay significantly lower day rates especially if you work with freelancers in countries such as India, where you can expect to pay up to 60% less. Of course, paying much lower rates for overseas employees can come with other sacrifices such as quality, which must be carefully considered.
  2. Helping to increase efficiency
    Freelancers and third-party agencies can help even established businesses to increase their efficiencies by enabling them to focus their resources and people-power on areas that need it most. These resources can also be scaled up or down as necessary during times of stress. In addition to being a very helpful resource, freelancers and agencies are often more committed to providing a successful outcome than internal employees who can at times sit back on the laurels.
  3. Bridging the skills gap
    Businesses are currently facing severe recruitment challenges especially in areas such as IT and Tech which are facing skills shortages. Recruitment and training are already expensive for businesses to undertake and the skills gap is exaggerating these costs. Outsourcing highly technical jobs to freelancers and agencies can enable businesses to gain access to the skills they need at a reduced rate even amidst a skills shortage crisis. What’s more, external agencies and freelancers are often far more committed to ensuring that their skills are up-to-date which enables them to deliver a market-leading service to their clients so that they can remain ahead of their competitors.
  4. Helping businesses to cater to global markets
    For businesses who are expanding abroad, outsourcing some of their services can enable them to more easily traverse troublesome time differences. In certain cases, using agencies abroad can even allow businesses to improve their customer service giving the illusion that they can provide a 24/7 support system. Global outsourcing can also be very beneficial for companies that are looking to expand into overseas markets, providing them with access to local experts who can help them to get their satellite businesses off the ground.
  5. Helping businesses to grow when needed
    Freelancers and outsource agencies can also be very useful to large-scale companies who are experiencing a sudden surge in business and require additional resources. As already discussed, recruitment can be a costly and lengthy process, hiring freelancers, on the other hand, can enable businesses to grow quickly in order to meet a surge in demand all the while enabling them to scale back slowly, if things should slow down again. The flexibility that outsourcing can provide can be the difference between the success and failure of a business.

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