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When to Outsource: 5 Decisions

It's easier than ever before to outsource services. Here's how to find out if you should do it.
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A trend I've been noticing in the last several years is small business owners increasingly choosing to hire independent contractors. We've long seen businesses pay outside lawyers or accountants rather than bring them on staff, but now outsourcing has become more popular for a growing variety of services.

Data from our SurePayroll small business customers shows the percentage of their employees who are independent contractors has grown 85 percent from May 2007 to May 2012, rising from 3.33% to 6.26%.

This increase is largely driven by just how simple it has become to find people with specialized skills. Technology and the Internet have made it incredibly efficient to search out people to do the tasks you don't want to do yourself. Sharing materials has become almost instantaneous as well. If you farm out graphics work on logos or signs for your company, for instance, you can see proofs as soon as they're ready. It's also very easy to pay for these services online with credit cards and PayPal.

In the meantime, the Great Recession and hiring downturn have produced an oversupply of skilled specialized workers who are offering up their services outside of established organizations. 

As a small business owner, this opens up the opportunity to get better skilled services for less money. But when should you choose to outsource?

Here are five questions you can ask to answer that question:

1. Is the task at hand a primary service or offering from your business? If not, don't waste valuable time on it. Do what you do well.

2. is there a competitive advantage to do it in-house? If you're not a tech company, it may not fit your needs to have an IT department in the building. You don't sell more pet supplies by having a desktop support specialist on staff.

3. Is it a specialized service you don't need to handle full-time? You might have only one campaign a year that requires marketing support, for instance.

4. Is it a commodity--something someone else can do better and more efficiently? Customers come to SurePayroll because payroll is something they don't want or need to know a lot about and they want it to be easy.

5. Are the costs of the service lower than what it would take in time and manpower to get it done in-house?

The trend in outsourcing or working with independent contractors doesn't look like it will slow down anytime soon given the stalled pace of hiring. It's something you should too consider using to your advantage.

Last updated: Jun 22, 2012

MICHAEL ALTER | Columnist | President of SurePayroll

Michael Alter is president of SurePayroll, America?s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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