Outsourcing- The synonymous to- your “Profits”!

From ages outsourcing has been considered as the practice followed by the western world, which is partially true. But the biggest question remains unanswered, why do they do it?

The answer is- it is synonymous to your Profits.

How?

As it is evident from the definition, outsourcing means transfer of activity and consequentially the hassles involved in the work.

Outsourcing is an alternative for permanent employment. For a small and medium scale business organization Human Resource appears on the liability side of the balance sheet. There are number of conditions attached to the permanent employment that directly affects the bottom-line of your business. The costs like

1. Establishment costs for setting up a physical business.
2. Minimum wages for the employees
3. Overheads on establishments from pantry to security.
4. Maintenance costs.
5. Statutory compliances.
6. Medical benefits/ insurances for employees.
7. Minimal or no conflict of interest.

Can take a serious toll on a budding organization. To counter the overheads the pricing is increased and as a result the bids are lost. Within no time a budding organization gets transformed into a doomed organization.  This is the major reason of failure of many start-up business organization in a country like India where labour cost is “Cheap”. 

The very fact that labour is “cheap” in India leads us to a false conclusion that we can get it done all the work with our in-house resource. The very philosophy puts the business and business model in self destruction mode.

The benefits of outsourcing can be explained with a small illustration-

A software development program is required to be developed by a team of two engineers working for 8 hours per day for 6 days.

Case1: Two permanent employees to develop.

Case2: Two outsourced employees to develop.

Case1: Proportionate salary (1/3rd of monthly salary) of two employees for 6 working days considering a working month of 20days (Salaries should be competitive enough to disallow attrition of employees). Proportionate cost of investments of establishments with all office furniture, computers, software licenses, statutory compliances will be loaded in the bid value.

Case2: Business is outsourced. Only cost of two software developers is incurred. Depending upon the nature of business, experiences & skillsets can be selected.

The solution to the problem is simple, outsource the particular job to a third party service provider at rate already fixed. The cheap availability of manpower can now be utilized for driving profits for the business. Increased objectivity of the manpower- We mean only business, no-nonsense.

Outsourcing means Win-win for all

It is amply clear from the illustration that outsourcing means business profits but what for the workers?

It is win-win for them too.

How?

For a person with permanent employment status with a particular organization chances of growth and remunerations are fixed. One can expect hikes only in appraisals and not to mention the compromised working hours.

Also, there are other overheads that an employee has to bear for the employment. The same can include-

1. Transportation charges for commuting to the place of work.
2. Botheration for long working hours.
3. Lack of flexibility in terms of working hours.
4. Fixed remuneration.
5. Lesser chances of immediate recognition and performance appreciations.
6. Repetitive nature of work leading to stagnation of career.

By freelancing the services an individual can excel in their field. The remuneration can be decided and quote can be higher for challenging tasks.

This can work wonders for those striving for that extra bit of money. With non-fixed working hours an individual can work after the normal office timings.

There are many web hosts that serves as bridge between those who wants to work and those looking for workers. The work philosophies have changed and tend to change in future. Work from home seemed a distant dream till recent past but is a common practice in IT industry. If your work doesn’t need physical presence then Outsourcing is the next big thing!!!

However the only thing one has to ensure is permanent availability of freelancers and work. There are many websites like- Paid2Work etc that bridges the gap between two extremes.

Kudos!! Happy Outsourcing!