0

To Employ or to Outsource? How to Make the Right Decision

As someone who owns or runs an SME, it’s highly likely that you’ve faced the question about whether you should employ someone or outsource an element of your business.  Making the right choice isn’t always just about cost, although that is likely to have a huge impact on your decision.  In this article, I’d like to share with you the pros and cons of each option and take a step further and look at the advantages and disadvantages of the different outsourcing options.

Which Tasks Can Be Successfully Outsourced?

Before looking at the different options, it’s probably worth looking at the different sorts of tasks that can successfully be outsourced, no matter how big or small your business.  Here are just some of the tasks that are ideally suited to outsourcing:

• Office cleaning

• Bookkeeping

• Marketing and related tasks

• Accounting

• Human Relations (HR)

• Payroll

Why Employing Someone to Do These Jobs Rarely Makes Sense

If you’re short on skills in any of these areas, what are the arguments for and against adding someone to your payroll against outsourcing the tasks in hand?

The first and probably most significant argument against employing someone is one of cost.  There is no getting away from the fact that when you employ someone, the salary you pay them is only a proportion of the total cost to your business of adding an extra bod to the payroll.  You need to think of the costs of any fringe benefits you offer them, as well as the cost of providing them with somewhere compliant to do their job.  Thereafter one of the other disadvantages of employing someone is the fact that you’ll need to find someone to replace them if they’re off sick or on holiday.  Safe to say, none of these negatives are present if you go the outsourcing route.

Why Outsourcing Wins Hands Down

When you outsource these tasks, you gain access to an expert to carry out your job, normally at a fraction of the cost of employing someone.  What’s more, with an outsourcing relationship, it’s your supplier who worries about holiday and sickness cover, leaving you with a seamless annual workflow and time to do what you do best: run your business.

Add to these advantages, the fact that outsourcing normally means that you save on capital investment, and you start to see why more and more business owners are going this route.  In the case of office cleaning, the chances are your cleaning agency will supply the equipment required to do the job and if you engage a bookkeeping or accounting firm, you’ll have the benefit of sharing in their software at a fraction of the cost of making the investment yourself.

Deciding Between a High Street and a Remote Outsourcing Option

While there are good deals to be negotiated across the board when it comes to outsourcing, in most instances an outsourcing supplier who works from a remote, low cost or out-of-town base will beat a high street supplier hands down when it comes to price.  In this day and age, when we’re accustomed to carrying out a whole host of sensitive activities at a distance, it makes sense to cash in on the savings that are to be made.  By choosing a high street location, don’t forget that it’s you who pays for the plush office and the luxurious furnishings.  With remote outsourcing there are no such costs and as such you stand to save significantly.  All of that said, take your time; make the right decision for your business and don’t forget to negotiate.

This article was written and submitted by Paul Marsden, Director of Virtual Business Source who provide outsourced bookkeeping and run the Payplus payroll bureau.  By qualification Paul is a Tax Accountant, but these days does little in the way of tax accounting.  In his role as accountant he has worked with small and medium sized businesses for over 25 years; a period that has seen many changes, particularly regarding the accessibility and implementation of technology.

Paul has an exceptionally strong personal and professional interest in technology and gets a real buzz from helping business owners use technology to become more efficient so they have more time to focus on business growth.

He’s spent the last 5 years running an outsourcing business that provides bookkeeping, payroll and accounting software services to SMBs.  Paul is a member of the IAAITC (International Association of Accountants Innovation and Technology Consultants), a group of UK accountants who combine to promote forward thinking in IT across the accountancy profession.  Currently the IAAITC is developing a framework for SMB’s to deal effectively with Information Security.

This article is a guest post.  If you would like to write for Money Soldiers, you may visit the Write for Us menu for details.