As we all know “cheap” is often only a short-term win but doesn’t necessarily guarantee quality and generally leaves a bad taste in your mouth. Staff resource within your business isn’t cheap, but quality outsourcing will provide a cost-effective solution. So, if you’re asking if outsourcing is cheap, maybe you’re asking the wrong question. Instead, is outsourcing cost-effective and solution focused?
The art of saving money
You’ve potentially heard that outsourcing enables businesses to cut labour costs by 60% to 70%, this is true and is supported by a number of articles and studies. To clarify where outsourcing makes a difference to businesses bottom line…
- labour & wages
- internet services
- computer hardware
- office space & amenities
- employee engagement
A great example of where outsourcing absolutely works is in the Philippines. Already an outsourcing powerhouse in Asia, the Philippines is on a hot streak and looks to continue upward. According to the IT-Business Processing Association of the Philippines (ITBPAP), the business process outsourcing sector will reach $40 billion by 2022.
How does it work?
A design agency in Australia for example, looking to hire an intermediate graphic designer to join their team. The average salary of a graphic designer in the land down under ranges from $50,000 to $70,000 plus on-cost and superannuation.
In the Philippines, the average salary for a graphic designer falls somewhere between $5,000 to $15,000 for junior through to senior level roles. In addition to salary, employers are also responsible for government-mandated benefits and health insurance. These contribution costs, managed by your outsourced provider, may vary according to the employee’s monthly salary. As an example, for an employee with a salary of more than Php 15,000 or over AU $390 per month, the additional monthly payment will fall somewhere between $40 to $100.
Outsourcing providers also charge an initial on-cost fee to recruit and onboard and then there are hardware and software costs to also consider. But ultimately even with the add-ons, the design agency from a budget perspective is in a position to comfortably hire two outsourced senior graphic designers for the price of one locally.
Companies and businesses utilising outsourced teams are able to take advantage of these reduced costs which provide better business flexibility. The opportunity to scale up and experience positive growth by maximising external resources is a common side effect of outsourcing
Is there a catch?
Unfortunately, some businesses still encounter hidden costs within the industry. In outsourcing relationships mutual trust is paramount. Ensure you’re not mislead and trapped with hidden fees by your provider, transparency is key from day one.
Outsourcing should be cost-effective
Cost-effective is ‘productive in relation to costs and expenditures’. Before you decide, ask yourself, “is this a cost-effective solution for my business?”. Cost-effective outsourcing reduces costs in both labour and recruitment, without sacrificing the quality of the services or products you provide.
Ultimately, outsourcing isn’t cheap, it’s cost-effective – there’s a difference, a big… big difference