The real cost of outsourcing

20th October 2017

The real cost of outsourcing

The real cost of outsourcing

I was at a networking meeting recently and we were discussing time management. As we dove into the topic, outsourcing was mentioned multiple times. Businesses around the world are hiring freelancers and outsource companies to perform more and more tasks. These include admin, research, accounts, web development, programming, scheduling, social media and much more.

As the conversations went on, it became surprisingly apparent that some people feel that outsourcing costs too much. People believed they were saving money by doing as many, if not all of the tasks themselves. Businesses are choosing to put their own time and resource into tasks that could be quickly dealt with externally. So, are they onto something? Is doing it yourself more cost effective for business?

Short on time? Watch the video here:

Outsourcing In Your Agency

Within agency life you can find yourself taking on everything, be it administration or invoicing etc, you take on them all. Now that would be a good thing if you excel at all of these things. However a lot of the time, the things we are doing are not things that:

  • we are experts in
  • excite us
  • we do with passion
  • we can complete quickly and efficiently

By doing an administration task to save the cost of a freelancer may actually be costing you money! Let’s unpack this.

Write down the hourly rate you charge your clients. It will hopefully be north of £100/$125 per hour.

Compare this with the cost of a UK virtual assistant at £25 per hour. (Price based on TimeETC here in the UK).

Now consider that someone working full time doing business administration will be extremely efficient compared to your own experiences, let’s assume they can complete the paperwork within 2 hours vs your 4 hours doing it yourself.

Virtual Assistant: £50

What you would be charging: £400

Don’t get me wrong… I know that if you are not selling those four hours to anyone at the time, that my maths is completely off. BUT let’s think about it a little deeper.

If you spend four hours doing the admin, you have lost four hours of working on your business. In those hours you could have been:

  • creating valuable content
  • boosting client relationships with telephone calls and emails
  • sending out an email campaign
  • responding to new leads
  • and much more (I know there are more I just want to get on with the blog) ?

You are essentially missing out on engaging in some of the many vital marketing and sales activities that will help drive your agency’s pipeline. The best way to help grow your business is not to sit and do the admin to save £50, but to use that time to drive your business forward.

There are many examples in agency life where we try to save money on third parties:

  • doing our own bookkeepping
  • designers trying to setup WordPress
  • developers trying to use themes instead of engaging designers
  • researching and testing plugins that might do a specific job
  • agency owners trying to manage multiple projects
  • non programmers trying to code work-arounds or hack at themes/plugins
  • attempting to manage all the social media accounts
  • you get the idea…

Doing these sorts of things yourself instead of outsourcing will likely exhaust your resources, distract you, rob you of the joy of running an agency and damage your pipeline.

Outsourcing may appear expensive per hour, but the real cost to not outsourcing is far more damaging.

Next steps

Take some time to review what you and your team do on a daily basis. What tasks can be easily documented and passed to a third party? What work is being done that is outside of everyones skillset?

When you are ready to start outsourcing, reach out to your business networks for recommendations. We’ve often found that Googling and finding online cheap resource leads to difficult experiences. Five dollar outsourcing can be just as harmful as not outsourcing…. but THAT is for another blog.

What sorts of work do you outsource? How do you outsource in your business? Let us know in the comments below.

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