Heads up! Entrepreneurs! With the threat of recession looming and inflationary pressure crashing your business aspirations, there has never been a better time to invest in outsourcing!
The US is currently in a crisis when it comes to employment. If you have kept an ear out for rumblings in the business world, you may have noticed that almost all major corporations have begun making moves since the beginning of 2023. They had started to prepare for economically harsh times and stimulate business growth.
On top of that, news just hit the New York Post stand that job openings have plunged to the lowest in July 2023. Could outsourcing be the reason? We witnessed a similar situation last year when Google began investing in bringing foreign talent to the company at more affordable wage packages. And not just Google but many other big corporations were and still are following suit and opting for foreign labor as an alternative solution to hedge against rising employee wage demands.
With all of these crazy developments happening in the US and, consequently, across the whole world, it’s only a matter of time before small and medium-sized businesses are forced to lay off their in-house staff and look for alternative solutions to spur business growth.
While it is unfeasible for small businesses to follow the big corporations’ lead and have foreign talent immigrate to the US, they can instead opt for outsourcing as a healthy middle ground.
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What is Outsourcing?
As defined by Expertise Accelerated,
“Outsourcing refers to subletting an organizational function in part or entirety to a third-party vendor that specializes in the field of relevant expertise.”
Essentially, outsourcing is delegating the responsibility of a business function or part of a business function to contracted employees provided by a trusted third-party service provider. While outsourcing can apply to any third-party service provider, such as ones providing talent based in the US, in this context, we are looking for more affordable solutions from the global talent pool, which means hiring foreign talent remotely via modern technology!
That’s right, outsourcing your business functions to remote professionals through a service provider is currently the most optimal way to:
-Combat the economic instability and financial pressure permeating throughout the business landscape.
-Achieve some semblance of business growth.
In 2019, outsourcing to remote professionals had already become a pivotal strategy for growing small businesses. Clutch reported that 37% of businesses already outsourced one or more business functions. And the number has only risen since then, in the wake of the pandemic.
It has been 3 years since the COVID-19 pandemic started, and a sizable chunk of the workforce was forced to work remotely to keep businesses afloat.
Looking at the bright side, the pandemic was a great learning moment for the world, as we saw precisely how viable remote work was.
Looking at the data compiled by Teambuilding.com, we can see that remote work was an outstanding success as a business practice, and a large percentage of businesses have stayed with it even after lockdowns ended. Therefore, at this point, there should be no doubt in people’s minds when it comes to the viability of remote work, as it has been demonstrably a resounding success.
Is Offshore Outsourcing and Remote Staffing Safe?
Regardless of the success or failure of remote work as a concept, one of the major sentiments echoed by the business community is the potential security concerns when hiring overseas professionals.
These concerns are completely valid, and a million different things could go wrong by hiring someone overseas. But the same can be said for hiring someone in-house.
One of the biggest myths around outsourcing is that it is somehow less safe than an in-house solution. This is patently untrue, simply because of the fact that regardless of the physical presence of an employee, you incur the same amount of risk when it comes to divulging confidential company data. For example, whether it’s an accountant in the office or a hundred miles away, there is an equal chance of malicious activity because they have equal access to the data.
In fact, there is a case to be made that outsourced professionals are far more secure than in-house professionals because they have a middle-management company facilitating employment and guaranteeing transparency and professional integrity.
A third-party firm will be contractually liable and can be legally penalized for misusing your data or defrauding you, so will take great care to vet trusted professionals and enforce strict internal control and monitoring to ensure there is no funny business happening. Meanwhile, in-house professionals are given a wider berth to operate in and face a significantly lesser degree of scrutiny, and so have more chances to pull a fast one on you.
There are a number of similar concerns and reservations that small businesses may have against offshore outsourcing, and while we can’t address them all here, Expertise Accelerated publication titled “Outsourced Accounting: Risks and Risk Management” is a great analysis of the risks of outsourcing and a must read for entrepreneurs today as outsourcing becomes the solution to the labor crisis.
The Best Business Functions to Outsource
Stating the obvious, predominantly desk-based jobs are the best to outsource to offshore remote professionals. Accounting is an especially popular business function to outsource among small businesses, thanks to the extravagant costs that come with a professional accountant.
On top of the sky-high cost of an in-house accountant, you have to consider that accounting is the backbone of the business.
You simply cannot go long in these economically unforgiving times without an accountant holding your hand. Whether it be outsourced accounts payable, outsourced accounts receivable, or even just outsourced bookkeeping, an accountant is better than no accountant.
This is why accounting shares the top spot with IT as the most outsourced business function today. Outsourced accounts payable is an especially good idea because your AP function needs someone who knows their accounting and finances to deal with vendors and suppliers and negotiate relations. While less vaunted, accounts receivable are still a very important business process, as debt collection and cash flow generation keep the lights on.
Information Technology (IT)
The IT department is the other major business function that tops the list. IT professionals also cost a hefty amount, and as we saw with the tech giants at Silicon Valley, they are just not affordable anymore.
Like accounting professionals, IT specialists operate entirely in the digital space and are perfect for remote work. Most foreign countries, especially Asian countries, have vast swathes of IT professionals in the job market, and their qualifications are nothing to sneeze at. With some of the finest IT talent in the world available to you at a better price remotely, who wouldn’t jump at the chance to hire such professionals and boost business growth?
Outsourcing is the future of business. Many of the greatest minds in the business landscape have realized that the key to success lies outside the US. And they have begun investing in global talent to stimulate business growth. With recessionary threats looming behind our shoulders, the best way to hedge against these oppressive forces is to start outsourcing now! Whether it be something as simple as accounts payable outsourcing or outsourcing the whole IT department, take the plunge and give it a shot before it’s too late!