Business Process Outsourcing
Business Process Improvement: The Key Statistics to Saving Costs
As companies grow and project teams continue to expand, managers and executives must explore ways to increase their resources while still managing costs. Find cost effective solutions that fit within budgetary needs can be one of the biggest challenges that company leaders face today. Do they look to add to the in-house team or outsource their resource needs? Onsite employee or a virtual professional? Both have their advantages and disadvantages. When making this choice, it’s important to weigh your options and, most importantly, to review the facts and statistics behind each. This is the key to successful business process improvement.
Analyzing straight costs is the first step when comparing in-house employees vs. virtual or offsite resources. Let’s assume you start with an employee who has a salary of $4,000 per month. You still have to add in fringe benefits (health/dental insurance, retirement plans, vacation time, etc.) at 35%, or an additional $1,400 per month. And don’t forget to add in the overhead rate (office space, equipment, supplies, admin costs, worker’s compensation, overtime, etc.). This can vary from company to company, but typically this ranges from 40% to 50%. Let’s assume a 45% rate which adds another $1,800. Suddenly your in-house employee is costing you $7,200 a month or $86,000+ per year.
Now examine the costs of a virtual professional. Let’s assume you start by looking at an offshore or hyrbrid model (combination of offshore and onshore). Right off the bat you’re going to see a cost savings in the base salary. Typically, by using an offshore option, you can save up to 50% on the salary costs, so your monthly cost could be $2,000. However, here’s where the real costs savings come into play. By using a virtual professional, you don’t have to worry about the costs associated with fringe benefits or overhead. You still have to look at initial training and onboarding, but from there your monthly cost is only the $2,000 or $48,000 per year.
When weighing your options between hiring an in-house employee or a Virtual Professional, it is important to have all the facts. There are many arguments to be made for and against each side. We have compiled some information that may aid you in your decision.
The Numbers
Below is a graphic comparing the costs between hiring an in-house assistant and hiring a Virtual Professional:
Other Costs
There are also many costs that are not easy to quantify or may not be quite as tangible. For example, the time you expend to train them, the costs to advertising for your search, the time it takes to interview and hire someone etc. You should also consider other overhead costs such as office space, employee benefits, and hardware and software costs among other things.
Hiring a Virtual Professional or an in-house employee may have a few similar necessities. For example each will still require time to be trained and get fully inculcated into your business set-up. The time you invest to get them up and running will be a huge factor in their success.
Not Just About the Money
While numbers are a great way to gauge whether you should hire in house or go virtual, it is important to keep other pros and cons in mind. An interesting infographic from SurePayroll exhibits how Virtual Professionals may be more productive than in-house employees.
At the end of the day it all boils down to your needs. A Virtual Professional can take care of almost everything an in-house employee can and will be just as skilled however; there are still some things that you may need the physical presence of an in-house employee for.
If you would like to discuss how a Virtual Professional can give you leverage and empower you to take your business to the next level, schedule your free Business Growth Strategy Session today. Let's discuss your business outcomes and talk about increasing your revenue and growing your business!
The Keys to Successful Outsourcing
As mentioned in the article “Initial Questions to Ask About Outsourcing,” whenever a company is looking for ways to cut internal costs, they often look at employing an outsourcing strategy to meet this need. Before embarking on such an endeavor, key decision-makers must ask themselves a series of initial questions to understand their goals and the different options available. As previously discussed, the answers you develop will serve as a guide to help you evaluate and gauge the different options that are available. The next step is to explore the different options available to you. While investigating available resources, there are some important points to keep in mind that will help ensure you are successful with your new initiative. Let’s take a look at some of these initial “keys” to establishing a successful outsourcing strategy:
- Many times we continue to keep work in-house because it’s “easier and our internal resources already know how to do it.” As soon as this excuse is given, we should ask ourselves the following: Could we not better utilize our internal staff to handle more complex or higher level tasks, thus taking advantage of their strengths, experience, and knowledge, while also offering them the opportunity to be more engaged and more productive employees?
- Look at several different options based on the initial questions and narrow down a couple that you want to test and further vet. Start by interviewing different resources and getting information about the services they offer, their company structure and size (if applicable), their experience, and their current customers. What are their goals in working with you and how do they view this business relationship? What are their operating hours? How will they interact with you? In addition to pricing and services offered, you have to dig a little deeper to better understand what they bring to the table.
- Understand that there is an upfront investment required when establishing a successful relationship with any resource you choose. Invest in establishing clear procedures and directions that document your requirements, the tasks you need completed, and your expectations to gauging success. This is not an overnight process; your current team will need to be committed to seeing this through and ensuring that your goals, as well as the goals of the resource(s) you have selected (which should be one of your determining factors) are met. Make sure both sides have bought into this and invest the time in establishing this upfront.
- Lather... rinse... repeat. When first establishing the outsource relationship and the processes associated with this, you should always begin with a testing period where you have the resource(s) perform certain tasks/projects and then you evaluate them. Provide clear and concise feedback and then test it again. Did the resource improve or address your recommendations/feedback? This is key, as you will need to evaluate if any improvement was shown and how the feedback was addressed. Look at critical determining factors such as communication, timely response or delivery of items, overall understanding of the needed tasks/deliverables, and overall quality. How did your vendor rate in these different categories? You can’t expect perfection after the first try, and if they show promise in these areas then you should continue testing and fine-tuning. If there are major flaws after the initial testing, then it might be time to investigate a different resource.
- Outsourcing is an ongoing endeavor in which you don’t simply “flip a switch” and then let it go. You have to view this relationship as a true partnership with both sides contributing to its success. You have to constantly work with your resource(s) to ensure that they continue to meet your expectations. You also have to ensure that, as your business evolves and practices/procedures change, you update and evolve your relationship with your outsourcing partner. If you have found a true “partner” to meet your needs, engage with them on ways to improve the relationship, look for measures to improve cost and efficiency, and work with them to establish new processes as you fine-tune existing ones to meet the ultimate goal of success.
These different discussion items are not the only “keys” to successful outsourcing, but they are certainly a good starting point. Always keep in mind your overall goals, and hopefully this advice will assist you in achieving these by providing you with some initial ideas and tips on outsourcing.
Uptown Press through Absolute Service, Inc. a U.S. company has its own production branch in the Philippines. We also utilize a network of freelancers and subcontractors, along with offshore resources, to offer a hybrid solution that meets our customers’ needs. We provide high-quality and cost effective services to a wide range of publishers, associations, and client all over the world. If we can be of any assistance in helping you with your outsourcing needs, including initial planning and deployment of an outsourcing strategy, please contact us at jack@uptownpress.com
Why Uptown Press?
When you send us a project, you can expect the following:
- An aggressively competitive pricing policy.
- Personal, responsive service (real people answer our phones and expediently address your questions or concerns)
- A specifically assigned customer service representative (with over 20 years experience) who manages your project from start to finish.
- The finished, quality product you hoped for when you placed your order.
- No surprises: You’ll be informed all the way through the process.
- The pleasure of working with a company dedicated to providing outstanding outcomes by helping you get what you want.
Call 410-889-8686 now for more information, to get a quote, to place an order, or email us at jack@uptownpress.com for prompt service.
