Failure To Embrace Outsourcing Costs Small Business Over $100 Billion Per Year

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) October 13, 2011 -- Small businesses are lagging well behind big corporations in adopting outsourcing as a means of reducing costs, and are overspending by many billions of dollars as a result. Conservative estimates suggest that the SME sector could reduce overheads by at least $100 billion by employing a higher percentage of outsourcers.

“Most companies are paying far more than they need to in staffing costs,” says Rob Palmer, CEO of staff leasing company LowCostStaff.com. “We live in a global economy, and today's technology has removed nearly all the barriers to creating international teams. Nowadays, even the smallest business can benefit from the cost reductions that outsourcing can deliver.”
The actual costs associated with in-house employees compares unfavorably to engaging offshore staff, which translates to significant cash either lost or saved. The difference can mean success or failure of any small business. For most small businesses, the payroll and related expenses account for 70% percent of their overhead, so cutting this particular type of expense in any way would help with the bottom line.

There are many costs associated with in-house employees. In addition to hourly compensation, you will also have to compute for Social Security and Medicare costs, health care costs, pension plans, training costs and paid leaves for vacation or sick time. Less regular but also significant are the costs associated with hiring as well as separation costs. These are all considered “hard” costs because they are easy to quantify. But you also need to consider “soft” costs such as day-to-day management, performance appraisals, personal development, as well as coffee, water, utility and physical space costs, which are not so easy to pin down.
For an employee with an annual compensation of $75,000, which is about $36 per hour for 2,080 working hours, you are actually spending about an additional $22 per hour on hard costs, and about $9 an hour on soft costs per employee. This means that instead of $75,000 a year, your in-house employee is costing you between $139,000 and $150,000.

Leasing offshore staff provides a proven yet highly-effective way of tackling this problem – slashing costs by up to 80%. The managed staff agency is paid a fee and a monthly compensation for the employee by the employers and the agency takes care of taxes, benefits, and so on. The employer just pays a fixed monthly cost that requires no guesswork or other calculation.

An emerging class of managed staff agencies is that which specializes in overseas, home-based workers who are equally if not more qualified than local counterparts. The difference is in their physical locations. Overseas, home-based workers are often likely to accept lower compensation, and the hard costs are different from those in the US or UK, for example. Managed staff agencies with overseas workers are therefore more likely to provide the employees you need at significantly lower overall monthly costs to the end employer. Plus, since these workers are home-based, the end employers save on physical space, hardware, coffee, utilities and other expenses.
The economic downturn has made this an increasingly attractive alternative to in-house employees for both small and big businesses. Of course, outsourcing to managed staff agencies will only work for certain positions which do not require any physical presence. These include encoders, content writers, software programmers, administrative assistants, transcriptionists, researchers and website professionals, to name a few.

Outsourcing just one or two positions can translate to thousands of dollars of savings per year. In today's challenging business environment, the outsourcing option could mean all the difference between failure and success.
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LowCostStaff.com is a staff leasing company that provides businesses worldwide with access to full-time, online staff at part-time prices. By adopting advanced technology and implementing innovative staff management techniques, LowCostStaff.com allows companies to achieve substantial cost savings of up to 80%, as well as greatly increasing productivity and improving cashflow.
If you would like more information on this topic, or to schedule an interview with Rob Palmer, please get in touch on 347 756 4226 or send an email to rob@platinuminternet.com

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