33

The Reasons Why Entrepreneurs Have Started to Outsource

Entrepreneurs are often faced with a dichotomy: How do I grow my business without blowing out my limited resources? For entrepreneurs with limited access to funding and sources of capital, the decision to hire additional help is never easy. Hiring a full- time employee can significantly increase your operating budget. It may not sound like good business judgment to hire someone full- time just to handle tasks that are generally considered non- essential. And that is one reason why entrepreneurs have started to outsource.

Outsourcing is simply the act of transferring or delegating a set of responsibilities, tasks or a project to a contracted service provider. This could be a Virtual Assistant, freelancer, telecommuter, home- based worker or an agency. Regardless of the term, outsourcing deals with remote workers or those who conduct work from another location.

Entrepreneurs have started to outsource because they realize it is a process that gives them a double- edged solution in developing their business. Used with strategy, purpose and mindful intent, outsourcing will make your business profitable by directly addressing the numerous variables that affect cost and revenue.

Here are 5 reasons why entrepreneurs should get into outsourcing:

1. Maximize Their Resources

When you hire a full- time employee, the effect on your budget will not just be felt on total compensation. But you will also incur additional units of expense on rent, training, documentation, Internet bandwidth, utilities, supplies and contingencies.

The cost of hiring a full- time employee is estimated to be equivalent to 1.5 to thrice his or her basic salary.

Now compare that with the cost of hiring a Virtual Assistant. In the first place, technically, you are contracting services not hiring an employee. The difference goes beyond terminologies. It defines the status of the appointment.

As a contracted worker, you are not required to pay a Virtual Assistant wages as mandated by law. You will only pay for total hours worked and it could fall below those of a regular employee’s. You are also not required to pay the contracted worker the usual set of benefits.

Overall, by outsourcing work to virtual assistants, the entrepreneur can save a significant amount of money and maximize his or her limited resources.

Image result for The Reasons Why Entrepreneurs Have Started to Outsource2. Increase Their Productivity Level

 So you get up in the morning after another night with only 4 hours sleep. As if in a haze, you reach for your first mug of coffee and open your e-mail. There are hundreds of unopened messages.

How much time will it take you to go through all the messages? You may have to respond to a good number of them. Meanwhile, you have an appointment with an important prospect in 2 hours. Or have you forgotten?

Entrepreneurs often find themselves mired in non- essential tasks that nonetheless have to be done to keep the business going. But this takes away valuable time from you. Time that could be used to attend to matters that correspond directly to your business bottom- line.

By outsourcing work to virtual assistants or remote workers, the entrepreneur is able to free himself up, get down to the business at hand and focus on tasks that will help grow the business.

3. Improve Business Efficiency

Here are a few key areas of business that can contribute to success but end up largely overlooked:

  • Marketing
  • Research and Development
  • Personnel Training and Development

Businesses know marketing is important to create new avenues for sales to work on. Research and Development keeps business update in trends and demand preferences. Personnel Training and Development are integral for building a solid core group of people to grow a business with.

But the truth is, businesses put these functions on the wayside because when results are difficult to quantify, it likewise becomes difficult to justify the budget.

By outsourcing these functions, not only will you contract the services of qualified experts but you can also manage costs because pricing points are much more flexible. There are a number of ways to negotiate payment terms:

  • Pay per performance
  • Fixed budget
  • Pay per productive hour

Remember these third party service providers are contracted not hired. This means payment terms are negotiable. Thus, you can have these functions integrated into your business without compromising your operating budget.

4. Assure Quality of Work

Just because they may work from home or from another location and are not formally employed, does not mean their quality of work is sub- par.

Quite the contrary, outsourced talent are highly- experienced and well- trained. Many have spent years working in a regular office. A good number of them have also taken advanced courses to improve their skill level or have sought certification such as for software development.

In addition to their skill level and experience, they will have the time to focus more energy on the tasks you need done and assure you of the quality of work.

5.Reduce Risk of Business Expansion

Outsourcing work will also give entrepreneurs another advantage: Business flexibility.

With outsourcing, you can be creative in your business modeling. Here are a few examples:

  • Designate only 20 hours of work per agent to streamline costs.
  • Contract the services of remote workers where there is time zone differential and schedule to manage customer support after your regular work hours.
  • For administrative work, assign 2 agents to manage two 4 hour shift per day. In a 22 day work month this set up will add 11 hours of productivity and gets more work done.

An overlooked benefit of outsourcing for entrepreneurs is that it helps them build strategic partnerships. An outsourcing engagement may start out as a Client – Service Provider relationship.

But with time and success, that could evolve into a strategic partnership whereby both the entrepreneur or the client and the service provider now work toward a common interest.

How is this possible? When you outsource, you should not only capitalize on the comparative cost advantages but also on the availability of talent, technology and experience. In short, get your outsourcing involved in the business.

Allow them to openly share opinions, suggestions and to make recommendations that would contribute to your business success.

A good example is when a client transitions from outsourcing to offshoring and begins to invest in the community of the service provider. From the virtual world, you now have facilities being set up in a remote location. Offshoring is proof that the business has grown and benefited from outsourcing.


When an outsourcing arrangement transitions to a strategic partnership, you will have an alliance that is built on shared values, purpose and vision. The end result will be unprecedented growth and long- term, sustainable success.