Outsourcing has gone being from a dirty word to a wise business decision in the last couple of years. Let’s explore why.
When the recession hit after the mortgage bubble burst, companies were shedding workers like rain running off an umbrella. The LEAN Manufacturing Model was being applied to every aspect of business, not just production, but also to administration, operations, sales, everything. Do more, with less. Reduce waste, cut inventory and seek innovation.
When outsourcing went sour
Outsourcing to foreign lands for production, manufacturing and customer service was blamed for the loss of many, many jobs.
Now, however, many companies are finding working in these other lands create problems that were never considered. Not just language barriers, but cultural differences, work ethic issues, quality and attention to detail differences. Then there is also the problem of dealing with foreign organizations and governments with laws, regulations, business mores and taxes. Many companies are closing offshore locations and returning operations to the United States.
Other small businesses didn’t take work across the ocean, just reduced their workforce and operated with fewer employees. Workers took on more responsibility and duties, often with no additional pay, many happy to retain a job.
But now that workforces are thin as well as LEAN and the economy is once again growing, the small business owner finds himself in a pickle. He has more on his plate than ever before. It’s great that more customers are in his pipeline and he’s had to hire more employees to meet the demand. But it also means the volume of his work has increased, too. And he no longer has workers who possess the expertise and experience he needs to run his business.
The return of sweet outsourcing
Rather than create new positions and add overhead, these small businesses are turning to outsourcing. But now, instead of shipping work overseas, they are turning to service providers who are also small businesses like The Payroll Department. Why establish a human resources department and add employees with salaries, benefits and healthcare? Service providers like The Payroll Department provide the experience and expertise to keep them on the cutting edge of payroll tax changes and new laws enacted that impact their payroll.
It’s not just payroll services, but everything from lawn care and landscaping to janitorial and administrative work. Bookkeepers are contracted services as well as marketing, advertising and IT.
Employment options were scarce for many and they turned into entrepreneurs, hanging out their own shingle. Now the companies who let them go are bringing them back – not as employees with a promise of employment, but as service providers – their prior jobs are being outsourced to them, or someone like them. Leadership is recognizing a way to get great service with less cost.
-Elaine of The Payroll Department Blog Team