How to Keep Outsourcing Costs Under Control
There are many reasons why companies outsource but the main one is to save money. Although you have to pay outsourcers for the work they do, in the long run it’ll be cheaper than hiring in-house staff. The only problem is that it’s sometimes hard to control how much you spend outsourcing, and this can cause budgeting problems. Here are a few ways to keep outsourcing costs under control.
Pay Per Project
The best way to keep costs under control when outsourcing is to pay per project rather than per hour. When you pay per hour, you don’t know exactly how long the job will actually take. If a worker is slow or runs into problems, this will drive up costs. When you pay per hour, you have a set amount that you’ll pay the outsourcer.
For example, let’s say that you’re hiring someone to proofread your eBook. If they’re working at an hourly rate, they’ll proofread until the book is finished and it may be hard to estimate how long this will take. If you agree on a sum for the entire proofreading project, no matter how long they take doing the work, you still pay the same amount.
Set a Cap
A method that’s more flexible for you and the outsourcer is to agree on an hourly rate but set a cap. To take the above example again, let’s say that you’re paying your proofreader $40 an hour with a cap set at $120. This means that if the work goes over three hours, you still pay $120. This allows you to budget realistically.
This method offers a huge advantage to you because if the work takes less time, your outsourcer will prorate it for you. If the proofreading actually only takes an hour and a half, you’ll save $60.
Overestimate Outsourcing Costs
Even if you pay per project and set caps, sometimes costs get away from you and can’t be controlled. Especially when you first start outsourcing, it’s good to overestimate your outsourcing costs. If you have $500 set aside to hire a web designer, it might be a good idea to add a few hundred more just in case there are snags. You can negotiate the job at $500 but keep the extra money on-hand in case there are problems.
It’s inevitable that sometimes an outsourcing job will cost more than expected, but with time you’ll learn how to better streamline the process and prevent his from happening.