Through outsourcing, you can pay other people to do tasks that would otherwise bog you down. If you had sufficient funds, you could hypothetically pay people to do anything, ultimately handling all your responsibilities so you could do whatever you want—but of course, when you start a business, your funds will likely be limited. On top of that, even if you had unlimited money, you’d still have to think carefully about who you recruit to handle your crucial job functions.
Even with a minimal budget, outsourcing can save you a lot of time—but you have to be aware of its inherent advantages and disadvantages, and outsource responsibly if you want to maximize its benefits.
Two Main Types of Outsourcing
Let’s start by examining the two main categories of outsourcing that exist:
Outsourcing to a business or agency.
First, you could outsource your work to another business, or an agency that specializes in what you’re trying to accomplish. For example, you could work with an agency that staffs SEO content writers to write more articles for your blog than you’d be able to write on your own. You could also work with another business in a partnership-like arrangement, trading products or services as an ongoing exchange. These arrangements often come with monthly stipulations; for example, you may have a contract for a monthly rate in exchange for a fixed delivery of services. In this way, agencies can serve as an extension of your business, often offering an entire department of resources. Accordingly, they tend to be more expensive than the alternative.
Outsourcing to independent contractors.
You can also outsource work to independent contractors, who are free to work when and how they want. They’re especially valuable for small jobs or inconsistent work, since they often don’t require monthly contracts, and are inexpensive enough to contact at a whim. However, they have less capacity and less expertise than an agency would overall, so they’re not ideal for all situations.
Regardless of which avenue you choose (or whether you use a combination of the two), you’ll need to understand the strengths and weaknesses of outsourcing overall if you’re going to make the right decisions.
The Advantages of Outsourcing for Time Savings
You can manage your time more effectively by taking advantage of these inherent benefits of outsourcing:
- Intuitively, you should understand why delegating a task to an external agent can save you time. Assuming you’re allowing the third party to take over one of your responsibilities completely, you can instantly check that item off your list and still ensure it gets completed. Granted, this requires some degree of trust in the agent you’re working with, but ultimately, you’ll save yourself the hassle.
- Outsourcing also saves you time by letting someone more experienced or knowledgeable handle work that requires a discerning eye. For example, you may be able to fake your way through a task, but chances are, you’ll spend far more hours doing it than someone who specializes in performing that task. Experts are more efficient than amateurs, and you can use that to your advantage.
- Outsourcing allows you to handle far more responsibilities than you would be able to address with a basic internal staff. You can sign a monthly contract for work you know you’ll need on a regular basis, and keep a fleet of independent contractors on standby to handle overflow or be ready for surges in needs. Essentially, you can customize your own system.
The Disadvantages of Outsourcing for Time Savings
There are some disadvantages to consider, however.
People aren’t going to work for free.
Depending on the nature of the job and what type of third-party you work with, outsourcing can become expensive. Independent contractors vary in rate from very cheap to very expensive, but you typically get what you pay for; quick jobs that don’t need attention to detail can be handled inexpensively, but if you need some serious work, you’ll need to be prepared to pay for it. Agencies, if they’re worth their salt, offer a similar range of prices, but tend to be more expensive since they have access to more resources.
Loss of control.
You’ll forfeit some degree of control when working with a third party. While you may be able to make a calendar of deadlines and priorities, you can never be certain that your agency will deliver what they’ve promised, or that the contractor you hired is as experienced as they claim to be. You can compensate for this by establishing history; the more you work with a contractor or agency, the more you can trust that they’ll get the job done. And if they fail to meet your expectations, you can move on.
- You won’t always have the same outsourcing needs. If there’s a sudden emergency or an unexpected increase in work volume, you might have to scramble to find someone last-minute. Similarly, if there’s a sudden drop in work volume, your monthly agency rate might go to waste. It’s important to have plans for all situations and circumstances.
The Importance of Valuing Your Time
When considering the cost of outsourcing your work, you need to have a solid understanding of the value of your own time. The core idea is this; if left to your own devices, doing your most productive, most profitable work, how much is your time worth? If you can pay less than that to outsource a responsibility, then that responsibility is worth outsourcing. The same logic can be applied to valuing a hypothetical employee’s time, which we’ll explain in a moment.
How are you supposed to value your time? There are a few possible approaches. One method is to calculate your hourly rate. If you’re an entrepreneur, you can calculate the rate at your previous position, and possibly add a little extra to compensate for your new experience. Another method is to calculate the number of hours it takes to complete an action that generates revenue, and calculate your profitability from there.
In any case, you should end up with a figure, say $100 an hour. If you’re currently feeling overloaded with work, and you find an independent contractor willing to take over 10 hours of work from you per week, look at their hourly rate. If they charge something like $25 an hour, you could hypothetically use those 10 hours you saved to do more valuable tasks, and ultimately end up $750 ahead each week because of it.
Obviously, not all situations are cut-and-dry, but understanding the value of your time does put outsourcing into perspective. You can use the same method to compare the expense of hiring someone with the expense of enlisting a contractor; simply use the salary or hourly rate you’d pay (in addition to benefits) to determine whether it’s more cost-efficient to work with a third party.
Where to Find Contractors
Of course, if you’re going to outsource effectively, you need to find the right agencies and contractors. Ideally, you’ll want people who are experienced, reliable, and affordable, but that’s a lot to ask for—and there are literally thousands of options to choose from. If you’re not careful, you could spend more time looking for a contractor than it would take you to simply do the work yourself.
You can make the process easier on yourself by asking around for recommendations. If you know any fellow entrepreneurs, or if you have an exercise buddy who shares your goals, ask them if they’ve used someone reliable in the past. From there, a brief interview process should tell you whether or not the contractor and the project are a good fit.
If you aren’t getting any referrals, you can start looking online. There are many platforms dedicated to helping you find independent contractors, including Upwork and Fiverr, and agencies frequently use marketing and advertising to make themselves more visible, so you shouldn’t have any trouble finding options there.
Maintaining a Relationship with a Freelancer AND your Time
Finding new contractors takes time, and if you end up with someone unreliable, you might end up redoing the work yourself, negating any time-saving benefits you might have enjoyed. Accordingly, the most efficient way to outsource in the long term is to build a relationship with your contractors or with your agency. Start things with the right tone and the right direction by spelling out exactly what you’re looking for, and communicating proactively about the potential problems you might face along the way. Tell them directly but politely when they deviate from your expectations, and give them a chance to improve. Similarly, listen to any feedback they have about how you could make the relationship more productive, and be willing to compromise.
As you do more work together, your partners will inevitably get more efficient at what they do, and will require less upfront communication on every task. It takes time for those clunky, early interactions to evolve into a well-oiled machine, but it can happen if you’re willing to put in the effort.
Outsourcing could be a valuable strategy for practically anyone, whether you’re in charge of an international corporation, or are simply starting a small business from home. It’s a strategy with many strengths and weaknesses, so its effectiveness boils down to how you’re willing to use it.
Abby Miller
Student at UC Berkeley, currently working on a degree in Electrical Engineering/Computer Sciences and Business Administration. Experienced in CSX, productivity management, and chatbot implementation.