Is it Possible to Significantly Reduce the Cost of Labor?

Many business owners view increasing labor costs as an inevitable part of running a growing business. While there are additional costs that come with business growth, you do not have to give in to the idea that there is no way to significantly reduce your current cost of labor. In fact, there is a simple solution that can help the majority of businesses reduce labor costs. That solution is outsourcing. Two of the major ways outsourcing can reduce costs is by allowing you to pay only for the services you need and avoid many of the overhead costs related to bringing on additional employees.

Pay only for the services you need

What happens when a salaried employee is caught up on their work or between projects? If you want to keep that person around for the next project you continue paying their salary. Do your hourly employees ever experience downtime? You have a few more options with them-send them home or adjust their hours-but still likely end up paying for some unproductive time. This is an area where outsourcing can significantly reduce the cost of labor. The team structure of outsourcing means that they can increase or decrease the amount of people and time spent on your projects as needed. This means that you only pay for the services you need and do not waste money paying for unproductive time.

Minimize overhead costs

Outsourcing can help you reduce labor costs by minimizing overhead. There are additional costs to having employees beyond just their salary. In fact, some employers use a tool called ‘the hidden paycheck’ to remind employees that their compensation consists of more than their salary. Elements that may appear on a hidden paycheck include health benefits, sick and vacation days, 401k matches, disability insurance and workers compensation. As the employer, these benefits can drive up the cost of labor. Due to the way outsourcing is set up, you do not have to pay these extra costs. In-house employees also cost you money in overhead costs related to physical space and tools. Office space, computers, and phone systems are all examples of overhead costs related to having in-house employees. Instead of going out and looking for a bigger office to accommodate the growing number of employees, look into areas that you can outsource. You may find that your current space can continue to work when you outsource certain tasks, instead of bringing in additional employees.

Look at your current business and your projections for growth in the coming months. Are there areas where you can outsource? Outsourcing is something that can scale with your business as it changes and grows. You can likely reduce the cost of labor now by streamlining some of your processes with outsourcing. In the future, the cost savings can increase exponentially as you find additional areas you can outsource and avoid unnecessary hires.

Infinit-O is the trusted customer-centric and sustainable leader in Business Process Optimization to Small and Medium businesses in the Financial Services, Healthcare and Technology sectors by delivering continuous improvement through technology, data and people.