How Outsourcing Can Help Your Business Navigate the Cost of Living Crisis

Businesses in all industries are weathering the storm of what is no doubt a difficult economic climate. Many leaders are finding that outsourcing labour can be a smart way to cut costs in these uncertain times.

For smaller businesses, outsourcing can be a great way to grow your business by involving highly-skilled professionals without the commitment of hiring permanent employees. This leaves you, as a business owner, more time to focus on the core business activities that drive tangible growth. The result? A more affordable and sustainable business.

For larger businesses, outsourcing menial tasks allows existing employees to refocus their workflow and prioritise essential tasks.

In both cases, the value of outsourcing can be boiled down to saving time so you can focus on essential business operations that’ll deliver results. You don’t just want to survive the cost of living crisis, but also thrive as a business. One way to do this is to focus on high-output tasks.

In this article, we’ll unpack outsourcing, discuss the cost-cutting potential in today’s labour market, and speak to a few employers who have already seen success from doing so.

What is outsourcing?

Outsourcing refers to the practice of hiring talent from outside of your organisation to complete tasks or provide services or products, usually on a fixed-term contract or individual project basis. These tasks can be usually completed in-house by your employees, or they can be new tasks that are currently unassigned within your organisation.

You may work with individuals (freelancers) or external companies who provide their own teams to take on your desired tasks.

How can you save money through outsourcing?

Fewer overhead expenses

When outsourcing labour, you will often work with individuals based in other cities or abroad. This means they won’t perform their duties within your office. While you may fear a loss of overview, you will save on workspace rent, energy usage, and equipment expenses since you are not required to provide them with the materials for them to deliver their work.

Fewer extra fees

When you hire employees, there are a number of additional expenses you must pay in addition to their wages. These include pension and national insurance contributions, employer’s liability insurance, and other costs, such as recruitment and training. When outsourcing, a number of these costs are eliminated. This doesn’t mean these aren’t paid, but they become the responsibility of the external party or freelancer with whom you are working. This explains why basic freelance rates are often higher than that of employees since they have to contribute to their own pension and insurance costs.

Focus on more important work

In terms of outsourcing vs. the DIY approach, when you outsource the more menial tasks of your startup or small business, you can focus on the core tasks that’ll really make a difference.

“Outsourcing allows us to keep costs under control, improve productivity, and concentrate on the areas of our business where we specialise,” says David Cohen, CEO of Love Rose. “It not only helped our business save thousands of pounds but our staff’s effectiveness and productivity have grown due to outsourcing non-core and time-consuming tasks and operations.”

As CEO of one of the UK’s largest online flower delivery services, he has 20+ years of experience in E-commerce and customer service. Being a small business owner, Cohen outsources accounting, marketing, and IT management, which allows him to get more done and trust important processes and tasks to experts, without having to significantly grow his full-time team.

What are the other advantages of outsourcing?

Hire experienced talent

A huge benefit of outsourcing – beyond cutting costs – is that you can choose from an expansive talent pool with highly specialised experience, regardless of geographic barriers.

“Outsourcing can be a more cost-effective option than hiring employees. Plus, freelancers and contractors may have specialized skills that are not available in-house, allowing businesses to take on more complex projects or expand into new areas,” says Jeff Johnson, estate agent and owner of Simple Homebuyers.

With 12 years of experience in his field, he outsources about 30% of his operation, leading to huge savings of up to 70-80%. “I decided to outsource as it was more affordable for me than hiring employees, I gained access to specialized skills which allowed me to scale my business with less overall cost and stress.”

Work with a variety of people

You and your team can benefit from working with outsourced teams or freelancers, giving valuable insight into how others work. Often outsourcing connects you with highly experienced individuals who are experts in their niches, and this can help business owners understand the finer points of tasks they may have less experience with.

What are the disadvantages of outsourcing?

Less quality control

When you outsource, you may not always be in the same room as your whole team. This means you have much less overview and control over what is being done.

Despite vouching for the benefits of outsourcing, David Cohen of Love Rose also warns: “You cannot anticipate having the same level of control over an outsourced team as you would over an in-house one. Some problems can arise when the outsourcing agency isn’t motivated by the same standards and goals as your parent business. If left unchecked, some outsourcing providers may reduce quality to boost income, which will impact the quality of your services.”

Less of a cohesive team spirit

Beyond business operations, it’s important to foster company culture. If your team works remotely or hybrid, and not everyone is a permanent and full-time employee, team spirit can feel a little lacklustre.

Lack of commitment

When you enter into an employment contract with employees, there is a certain level of security there on both sides. When working with outsourced labour, this level of commitment is mutually lacking. Of course, there are very dedicated freelancers out there, but they have no obligation to you and vice versa, so there is always the possibility they may jump ship.

Which tasks can be outsourced?

Many tasks can be outsourced, but these are the top areas in which you can see results through drafting in extra hands:

Web design and branding

Seeing a halt in growth? It may be due to your brand identity – or lack thereof. You won’t get far without a strong visual identity and a well-functioning website. Of course, there are many web builders that are very user-friendly, but it’s almost always a time-consuming process that is best left to the professionals who can get better results in less time.

Administration

Nobody wants to spend time on administrative tasks, but many are a necessity. As a business owner, your time is valuable. You have the business knowledge necessary to operate at a higher, strategic level than spending time on administration. Since it can be an entry-level position, you can also outsource here for very low costs.

Legal, tax and compliance

A similar category as above, you don’t want to get bogged down in these time-consuming yet extremely necessary tasks. With legal, tax and compliance issues, you can get into serious trouble if these are not handled properly, so it’s best to leave them to a professional – this is not a corner worth cutting.

Content creation and social media management

Content is the currency of the web: it drives traffic, gets you high search engine rankings, and helps communicate your brand. If you sell anything, whether it’s a product or service, you can benefit from high-quality copy on your website. Many companies are experimenting with AI tools, which is worth exploring too, but make sure everything is seen by human eyes before posting it on your website.

Likewise, social media, it’s a terrible bore but necessary if you want to build any kind of brand awareness in today’s market. It’s harder than it looks to stay relevant online since trends and algorithms move fast, so it’s really worth dedicating somebody to take care of this for you.

Rhett Stubbendeck, CEO of the insurance company for medical professionals, LeverageRx, hired a freelancer to write blog content. He says: “This has not only cut down on our marketing costs but also driven engagement on our business’s website. Therefore, we are not only cutting down on business spending but also getting a great return on investment. I trust our freelancers, they are specialists in the area and are always on time with deadlines. Outsourcing has reduced my business’s spending by 30%, which is ideal.”

Customer service

Another time-consuming must is customer service. While they may not always be right, your customers do hold up your business, so you’ll want to treat them like royalty. Plus, customer ratings on external review sites, such as TrustPilot, go a very long way, so you don’t want to pass up the opportunity to build a trustworthy reputation. As with administration, customer service is relatively entry-level, so it is worth outsourcing this to free up time for more integral business operations.

There are many advantages to using outsourcing such as having access to experienced professionals while being able to get into deeper work yourself. Although there are risks involved, it’s a commitment-free decision so it’s definitely worth experimenting with. You can start small on websites such as Fiverr, which provides a bank of experts from various fields with accessible rates. Now go ahead and see for yourself if outsourcing could drive savings and allow you to focus on business operations that produce real results.