OutsourceSurvival.com

This started out as 1 article, but started to get a bit on the long side, so for your convenience I’ve split it into two parts. Part 1 discusses purchasing power, whilst Part 2 discusses scale and efficiency advantages.

Successful outsourcing creates LEVERAGE and UNLOCKS your time so that you can focus on the things important to you.

Off load the junk, low value activities or the things that you don’t have the skills or resources to do efficiently. Doing this frees you to apply more resources (time/money) to the important activities within your business. And that means increased profit.

In this article I’m going to discuss the leverage advantages of using freelance providers. What do I mean by leverage? I’m talking about Purchasing Power + Scale + Efficiency. I’ll discuss these in the context of outsourcing below:

Purchasing Power: You’re actually a lot wealthier than you think…

If you’re reading this from the US, UK, Australia, Canada or any one of the first world nations your local currency has a lot of purchasing power. If you’ve ever travelled overseas you’ll know what I mean, $60 a night for 5 star accommodation, meals and drinks? You won’t find that at home!

Buying locally with your local currency means you only achieve 1 to 1 relationship; your dollar is worth the same to you as the guy that you’re giving it to. But shop overseas and you can achieve 1 to 20 ratio (or more), because your currency is worth more (relatively speaking) to the guy you’re giving it to. I’m not an economist, so I’m not going to try and get into the details of this effect, but to summarise; it works because of the relative wealth and economic stability of your country compared to that of another. Wages, living costs, food, standards of living tend to be proportionately lower in the less wealthy nation, and this has a direct impact on the cost/value of labour (what people will charge for their time and skills). For example, it costs less to put a roof over your head and food in your stomach in India, so the minimum price you can afford to charge for your time is less. Makes sense right?

What does it mean to you? Effectively that you’re able to buy 10 or 20 times the services for the same money. Of course the inverse is also true… try buying from a country with a more valuable currency than yours… it can feel like you’re paying double or triple the price you would at home, ouch!

Engaging an overseas provider enables you to access this purchasing power. It means buying the same or similar services for your business at greatly reduced prices (think 70% - 90%+ discounts). This disparity also means you can purchase MORE or HIGHER QUALITY goods/services than you reasonably could at home. It creates opportunities that would simply not be affordable to do if you relied on local service providers. This is particularly useful to small business or entrepreneurs competing against bigger competitors with deeper wallets.

For example, say you run a small company and once a month you send out a newsletter/specials catalogue. You may have a junior employee spend 3-6 hours preparing this, or you may do it yourself. Let’s say you pay whoever does that work $15/hr. That’s wages or an extra couple of hours in your day (if you work for free like me ) with a direct or opportunity cost of $45 - $90.

Now, what if I told you that you could hire a university qualified professional writer, and a similarly qualified graphic designer to write and compile that newsletter… and you could do that at a cost of $5/hr or less? This could offer you a couple of advantages:

• it would free you or your staff to focus on incoming producing work, unlocking resources;
• it may result in a HIGHER quality product and brand image for your business giving you a competitive edge;
• it will save you money, helping maximise your positive cashflow; and
• it frees you from one less distraction, so you can focus your core business functions.

But that’s not all (here come the steak knives).

There’s more to it than just the money. Outsourcing also offers SCALEABILITY, FLEXIBILITY, and EFFICIENCY advantages. Read on for Part 2, which will look at these aspects.