The Benefits of Hiring Remote Staff
Outsourcing involves the hiring of remote staff; or people who are located outside the confines of the company. The term “remote” connotes a location that is of considerable distance from high-activity or high-traffic areas.
In the context of outsourcing, remote staff means contracting people or service providers that are located in areas or regions where comparative cost advantages and economies of scale exist. Because the primary function of outsourcing is to reduce cost, the comparative cost advantage can be found in labor cost.
If a company was to hire a personal assistant, it would have to pay a regular office worker a minimum starting salary equivalent to AUD$20 per hour plus benefits. The computed total compensation that is due a regular office worker is equivalent to double the basic salary. On the other hand, if the same company was to hire a Virtual Assistant or VA to do personal assistant services, the company would only pay the VA an hourly rate which currently averages AUD$7 to AUD$10 per hour. Since the VA is typically a self-employed freelancer and not a regular employee of the company, he or she shall not be subject to government mandated or company sponsored benefits.
A Virtual Assistant is an outsourced employee; he or she has been delegated tasks by the company which must be accomplished with accordance to the term and conditions of the contract. From the basis of outsourcing one job, we have already seen the cost reduction implications of outsourcing as a cost management solution.
If the company was to outsource an entire department or series of jobs to a remote staff, the implications on cost as well as productivity would be even more magnified.
Benefits of outsourcing work to a remote team
- Cost-We already made it clear that companies reduce costs from outsourcing based on compensation alone. A company can further streamline salaries if it outsources from Asian countries such as the Philippines and India where the average wage rate for outsourcing work is between AUD$3.50 to AUD$7.00. Assuming the company outsources the entire back office operation; accounting, human resources and Information Technology, the company would be able to generate more savings because of economies of scale. Service providers from India and the Philippines adjust the hourly rates based on volume of work. If the campaign needs more people and runs longer hours, hourly rates may be adjusted because volume of work is high.
- Productivity– Although outsourcing utilizes people with significantly lower labor costs, it does not mean the quality of work or service rendered will be sub-standard. The adage, “you get what you pay for” does not hold true for outsourcing. In fact, outsourcing benefits small business owners greatly because now they can afford to hire people with highly technical skills. Unlike regular office employees who are paid a fixed salary per month regardless of level of productivity, outsourced workers are only paid per productive hour. If your regular office employee takes coffee breaks, checks his social media status or chats with fellow workers near the water cooler, you will have to pay them for those hours.
- Optimization of Resources– When the world entered into a recession in 2008, companies needed to assess their situation and develop a strategy that would allow them to streamline costs without compromising productivity. Outsourcing was accepted as a cost management strategy but the recession highlighted its ability to contribute to productivity in two ways. First, it gave companies access to skilled talent who cost less and second, by transferring departments that are tasked with non-essential work, the company can re-align or repurpose resources to core activities or those that are directly related to revenue generation.
- Flexibility- By outsourcing skills from other parts of the world, companies can also take advantage of time zone differentials and ensure operations and other key areas of responsibilities are managed 24/7.
By implementing outsourcing solutions in their business strategy, companies can exponentially improve productivity by reducing costs and improving revenue generation.