5 Ways Outsourcing Work Reduces Your Costs

02 Feb 2017 BY Shawn Michaels POSTED IN Outsourcing WITH 0

5 Ways Outsourcing Work Reduces Your Costs

When you think about outsourcing work, you often only think about the savings you will achieve by getting equivalent workers at a lower salary. However, most businesses overlook the fact that it is not only the lower salaries that you are benefitting from but various other factors such as no employee tax to pay!

With your employees in your current office, you have an obligation to pay:

- a monthly salary

- national insurance contribution

- and a certain percentage of tax per employee.

- Pension contributions

- office and desk space rental per employee

- the cost of infrastructure like computers etc.

And perhaps an even less noticed indirect cost is the amount of time spent by employees being 'unproductive' or not having much work to do, which is inevitable in any business or job role.
So in reality the actual cost of hiring an employee in your local office is about 30% more than his/her annual salary. So an employee on $40,000 per year, actually costs your company $52,000 per year!

To highlight some of the points above, here are 5 ways outsourcing will help reduce your costs:

1. Less Office Space

With virtual employees you don't need to worry about providing office space, because your virtual employee works from out office remotely for you. Your outsourcing agency will provide the desk space and facilities. So you need not move to bigger offices as your business grows, keeping your fixed costs low.

2. Less infrastructure

With new employees you not only have to ensure you have a desk space for them, but also provide the infrastructure for them to work with. A computer, stationary, work tools etc. With virtual employees, your outsourcing agency will provide everything so there is no cost on you.

3. No National Insurance

With your virtual employees, they are legally employees of the outsourcing agency based offshore. You have no National Insurance of Tax contributions to make with their salary. Great!

4. No employee Tax

In countries like UK, companies need to pay an employee tax contribution. This can lead to thousands in costs as a company grows. With virtual employees, there are no tax implications as such, as the employees are legally hired by the outsourcing agency.

5. Less Salary

Offshore Virtual employees generally require a small salary which is typically 70% less than your local employee. Why do you think the large corporations have started this trend of hiring employees offshore? This doesn't mean to say your virtual employee is underpaid, the salary requirements are the market rates within their country, so all is fair.

Outsourcing work to virtual employees is a brilliant way to eliminate all of the above extra costs, as well as benefit from the substantially lower salaries. With reputable agencies like myvirtualpeople.com, you can hire degree educated virtual employees for numerous roles for only $4.49 per hour. And that’s all you pay! No other costs involved, just a flat hourly rate, whilst MyVirtualPeople provide the office space, desk, infrastructure etc.

If you are serious about reducing staffing costs, outsourcing work to virtual employees is the way to go about this. Feel free to email me directly on rob@myvirtualpeople.com for more advice on this.

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