Businesses spend as much as 30% on payroll expenses in order to function efficiently. Depending on the size of a business, that spend could be millions of dollars.
Since many businesses don't have the money required to keep up with expanding payroll costs and local labor requirements, it has put smaller organizations at a disadvantage when competing with bigger companies. The solution to that inequity is outsourcing.
Outsourcing labor gives companies access to qualified, affordable talent. Working with an outsourcing service to find that talent makes the process seamless.
Not all outsourcing companies are created equal, which is why we've crafted this post! Below, we walk you through 7 key considerations to keep in mind when deciding which outsourcing partner to bring on to help you solve your labor issues.
1. Cost
While not the only factor that's worth considering when choosing an outsourcing company, cost undoubtedly figures into the equation. You're outsourcing to save money, so if the economics don't make sense, the juice isn't worth the squeeze.
Fortunately, there are several outsourcing companies out there, many of which work out of countries that have a low cost of living and consequently, low compensation expectations.
Before you go too far down the rabbit hole with an outsourcing service you're considering, have them give you a labor cost estimate. That way, you can know immediately whether they're worth engaging further.
2. Reviews
It can be hard to gauge the quality of an outsourcing company just by looking at their website and having a couple of conversations with them. This is where reviews become invaluable.
Online reviews are almost always available for companies that have been in business for a respectable amount of time. You can find these reviews on sites like Yelp, Google, and Glassdoor.
Be wary of a company that has less than a 4-star review average, less than five reviews, or no reviews from the last six months.
3. Communication
You must be able to communicate with the team that's doing work for you. Is that going to be a possibility when hiring labor through the outsourcing service you're working with?
The big barrier when it comes to outsourcing and communication is typically language. Countries that don't have a culture of speaking English, for example, would have a hard time taking intricate directions in English.
You can gauge how well you'll be able to communicate with outsourced labor by seeing how well the manager selling you outsourcing communicates. Chances are, they communicate better than the labor they'll connect you with.
4. Infrastructure
This is one of the critical factors that different outsourcing companies don't get judged on and should. If the company you're working with is located in a country that has limited access to the internet and electricity, that may present a serious problem.
Imagine being up against a deadline and losing your outsourced team for three days due to a power outage.
Also, government infrastructure is another thing to be wary of. Countries that are run by authoritarian regimes might be able to gain access to company data without due process. That would put your organization's intellectual property at risk.
5. Service Agreements
Speaking of intellectual property, assuming your outsourcing company operates out of a country that respects the organization's right to privacy, you'll want to have agreements in place that secure the information you're sharing.
For example, an NDA should be signed by your outsourcing company that guarantees workers won't share the insight they gain during your partnership. In addition to an NDA, work contracts that mandate the amount of labor you have access to daily, state your rate, and other details about your employing outsourced individuals should be provided.
Any company that's rushing to get labor onto your job without having paperwork in place is likely too unprofessional to consider.
6. Ability to Scale
Flexibility when it comes to resources can make a huge difference in your outsourcing experience.
Imagine your organization suddenly gets inundated with work. At that moment, will your outsourcing company be able to meet your heightened demand by putting more people power on your account, or will they be limited? Conversely, if business slows down and you need to scale down your payroll expenses, does your outsourcing company offer you that flexibility?
Responsiveness to demand is among the chief PEO benefits (professional employment outsourcing benefits) companies can enjoy, so make sure your partner takes that benefit seriously.
7. Quality of People
The chief gauge of whether or not your outsourcing experience will be successful is whether or not you like the people that'll be doing your work.
Are the people working with you talented? Do they turn around projects quickly? Are they able to take direction well?
Those are factors you'll likely have to assess over time with your outsourcing service.
An Outsourcing Service Is an Invaluable Partner in Today's Economy
As the world economy finds its way through a recession, saving money is a key consideration businesses need to stay mindful of. Partnering with an outsourcing service is among the quickest ways to bolster cost-cutting without sacrificing the quality of work.
We hope that the information we've given you on assessing outsourcing partners enables you to find one that will be the perfect match for your organization. There are many business outsourcing service providers out there, so don't be afraid to interview a handful to come to the perfect pick.
