A report by PricewaterhouseCoopers Retail & Consumer Industry Practice revealed that 68% of consumer products companies are currently outsourcing some of their workforce. Many business owners are starting to realize the benefits of outsourcing. As many companies continue to grow, the number of activities that have to be performed also continues to increase. So if you find yourself handling operational issues instead of growing your business and reducing costs, it might be time to figure out what part of your business to outsource.
One of the most commonly outsourced business services is payroll processing, but still for some reason, 60 percent of small businesses handle this service by themselves. If you have a small number of employees in your team, managing your business’s payroll won’t be a problem. But as your company grows and you hire more people, handling payroll processing in-house can become a headache and time consuming. Managing your employees’ applicable tax returns and deductions, annual leave, joining and exit formalities, loan advances and bonuses can turn into a nightmare very quickly. However, if you outsource, you will save a lot of money and increase your company’s tax compliance. In fact, the IRS reports that about 40% of small businesses pay at least $845 in penalties every year due to incorrect or late filings and payments. So if chosen correctly, outsourcing payroll processing can reduce a lot of mistakes and save you money that would have otherwise been used to pay fines.
Outsourcing Information Technology (IT) Services
A study by Deloitte revealed that 31% of IT services were outsourced in 2017, the driving factors being to cut costs and focus on core business activities. Outsourcing IT services is becoming more beneficial to small businesses because third-party vendors are now able to provide high quality services that are scalable to the company’s needs without the need for huge investment capital. For example, instead of buying and managing servers on your own, vendors and other data centers can provide you with cloud computing, database analytics, disaster recovery plans, and other valuable services. These services can save you a lot of money, and even enable your business to compete with large companies. However, there are several risks and concerns that might arise if you outsource to any third-party provider. But you can avoid such risks by making sure you are working with the right company. For example, a company which has been properly vetted and can offer the specific IT services that your company needs, can be very valuable to your business. According to Coretech, the relationship between a business and its IT service should be a collaboration, and a personalized service leads to good efficiency and identifying the right technology for the company’s workflow. This also guarantees security and the creation of a solid business relationship.
A survey by upwork revealed that 48% of companies are now hiring freelancers because of their flexibility. Another top reason was to scale in order to meet project demands and to find skills that they do not have within the company. It is also cheaper compared to having full time workers because you will only scale staffing needs when the need arises or according to projections.
Reducing the number of activities that have to be carried out is crucial for the survival of your company. You will benefit from more freedom and the time to focus on your company’s main mission and achieve your goals.