| Pay an individual outside of your company to | | | | complicated software tasks to experts in the |
| complete a software project for you and you could | | | | industry. They are often able to complete complex |
| find yourself saving money in the process. This is a | | | | tasks quickly and efficiently. |
| concept which may seem counterintuitive to some | | | | Outsourcing also makes employees more efficient |
| but those who have embraced the idea of | | | | because by allowing individuals to focus on only one |
| outsourcing realize the cost savings associated with | | | | task at a time there is less time spent transitioning |
| the process is one of the benefits. Outsourcing | | | | from one task to another. Many employees and |
| results in an overall cost savings for a number of | | | | employers think multi-tasking is a way to increase |
| reasons. Outsourcing contributes to reduced labor | | | | productivity but it can actually have the reverse |
| costs and greater productivity. Additionally, | | | | effect. Employees with too many responsibilities may |
| outsourcing virtually increases manpower giving | | | | feel pressured to work on each task each day. This |
| companies greater capabilities. | | | | can be detrimental because each time the employee |
| Reduced Labor Costs | | | | switches from one task to the next it is necessary |
| For many the most important reason for outsourcing | | | | to get back up to speed with the new task and |
| is to reduce labor costs. Employers may not be | | | | remind himself where he left off when he stopped |
| obligated to offer benefits such as social security, | | | | working on the project. |
| Medicare and workers' compensation to the workers | | | | Finally, outsourcing can lead to greater productivity by |
| who are completing the outsourced work. | | | | reducing underutilization. For example outsourcing |
| Additionally, these individuals often have their own | | | | very specialized projects requiring expert analysis is |
| offices and computer equipment and are capable of | | | | preferable to maintaining this expert on staff when |
| completing their work offsite. | | | | their services are only needed occasionally. If this |
| Labor costs can be a significant part of a company's | | | | were a salaried employee he would be greatly |
| budget for the year. A company that is able to | | | | underutilized. However, outsourcing these occasional |
| reduce their labor costs will be able to enjoy a | | | | projects to an expert prevents the underutilization |
| greater profit margin without making any other | | | | phenomenon. |
| changes to their business operations. There are | | | | Increased Manpower |
| certainly other changes which can be made to | | | | Another way outsourcing can save you money is |
| increase profitability but reducing labor costs is a | | | | through providing your company with increased |
| guaranteed method of increasing profitability while | | | | manpower. This is especially important for smaller |
| other methods of increasing profitability such as | | | | companies who would normally be precluded from |
| marketing different niches will not guarantee success. | | | | attempting to secure larger government projects. |
| Greater Productivity | | | | This is because there are typically requirements |
| Another benefit of outsourcing is increased | | | | regarding the number of employees a company must |
| productivity. Greater productivity can be another cost | | | | have available to work on the project. Maintaining a |
| savings benefit for companies. When work is | | | | network of qualified individuals gives a company more |
| outsourced there are a number of factors which | | | | bargaining power when negotiating larger contracts. |
| contribute to increased productivity. Productivity may | | | | Outsourcing is really ideal in this situation because it |
| increase due to workers being assigned appropriate | | | | enables the company to work with highly qualified |
| projects, workers being more efficient and less cases | | | | individuals when necessary without having to retain |
| of underutilization. | | | | these individuals as salaried staff members. This is |
| Assigning workers to tasks that are beyond their | | | | significant because niche experts often become so |
| capabilities is one way to cause a decline in | | | | specialized that working as an independent contractor |
| productivity. While challenging employees to think for | | | | is really their only option because as a salaried |
| themselves and take on increasing responsibility is | | | | employee they are more of a liability to companies |
| worthwhile, giving an employee and assignment he is | | | | than they are an asset. This is because many |
| not qualified to complete can be damaging to | | | | companies do not want to bear the burden of |
| productivity because of the learning curve involved. | | | | keeping these individuals on staff when they can |
| This is why it is so important to outsource | | | | outsource the work to them on a per contract basis. |