Outsourcing Isn’t Just a Profitable Tool For Large Organizations

In the corporate world, the word “outsourcing” is either a golden buzz word or a gloomy state of the economy word. If you see it as the former, you’re likely a member of the white collar side of things. If you see it as the latter, you’re likely a member of the blue collar side of things. If you are a small business owner, you may not have even considered the term. However, outsourcing can provide you with the power to engage in business on a much larger scale with much less investment capital than would normally be necessary.

Outsourcing typically refers to the practice of businesses hiring other businesses to provide products or services, rather than going through the expense of hiring your own management team and/or staff to oversee the production of said product or service. White collar workers or executives like outsourcing because it allows large corporations to keep their overhead and fixed costs low. It’s more attractive to them since they don’t have to hire multiple employees, provide facilities, and equipment to produce their products or services. These businesses can focus on sales and revenue. Most importantly, especially in unpredictable economic times, businesses that rely on outsourcing can quickly change their business models to meet the needs of the changing marketplace, without having to cut through layers of bureaucracy and employees.

Blue collar workers however, have a different perspective, not because outsourcing is bad, but because oftentimes large businesses have switched their business models from large corporations to major outsourcing operations. When this happens, employees often get fired. However, outsourcing isn’t necessarily all negative since the companies to whom these outsourced projects go, must also employ people.

In reality, outsourcing is the natural next step in the industrial revolution. The industrial revolution took place when specialized labor and economies of scale were discovered. Outsourcing takes this a step further by transforming the firms that do outsourcing projects into business entities that engage in specialized work to achieve greater efficiency.

What Does All of This Mean for the Small Business Owner? Philippines outsourcing

You might think that all of this sounds great for big corporations, but outsourcing certainly isn’t something for small businesses. However, the reality is that outsourcing works even better for small business owners. Think about the most difficult aspects of being a small business owner. Usually, worker payroll taxation and worker benefit packages are right near the top of the difficulty chart for the small business owner, and who’s going to manage all the HR issues that employees dictate anyway? On top of that, you have a variety of state (and possibly federal) regulations you have to follow regarding employees, such as workers’ compensation laws. Of course, when your business needs to purchase specialized equipment to do certain work or you need to hire a technical specialist to set things up, getting enough cash together to invest in what you need can be the ultimate challenge.

Now consider if you instead chose to hire another business that already has the equipment you need and specializes in doing the work you need done. You don’t have to lay out any capital or figure out how you’re going to manage more employee benefit packages or HR training. You simply pay a set price and get what you need. You can continue to focus on doing the aspects of your business for which you’re already prepared. You can add a new, complementary product line to your mix without adding additional headaches and financial expenses. Further, since you don’t have to invest in these things, if your new product line doesn’t work out, you can simply stop selling it and move on to other business ideas. If you had invested in more human resources and equipment, you would be stuck in a situation of either trying to simply minimize losses while selling a product or liquidating equipment and firing employees. So the real positive for small businesses about outsourcing is that you can pursue a variety of business ideas and try different things out to maximize your profitability without any heavy investment.

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