Outsourcing Work — What Can I Do To Facilitate My Business Operations And What Are The Ramifications?
Outsourcing can reduce a company’s overhead significantly. By outsourcing work to an independent contractor, the company does not pay payroll taxes, workers’ compensation insurance, or liability insurance for the contractor.
The company saves money because it does not need to provide a space to work or give any of the essential tools required to perform the job. The independent contractor provides the tools he or she needs. Some independent contractors may work on-site, but many outsourced jobs are performed by telecommuting or at the contractor’s business.
Outsourcing in the United States typically involves hiring an independent contractor to perform some of the duties that would generally be performed by an employee of the company. For example, a company may outsource its IT operations, security, or payroll to another company instead of hiring full-time employees to do the work in-house.
Companies Should Monitor What Contractors Do
It may not be fair, but consumers blame companies for the actions of their outsourcing partners. Suppose a company mistreats its employees by paying low wages, producing low-quality goods, or use substandard materials. In that case, consumers generally hold the company outsourcing the jobs guilty of the same low standards committed by its outsourcing partner.
Therefore, companies are often in the position of overseeing and monitoring their outsourcing partners to ensure that the partners meet the high quality standards that the company advertises for its brand. However, this necessary oversight may defeat the many advantages of outsourcing jobs.
Other Considerations of Outsourcing
Other things to consider before outsourcing jobs or manufacturing include:
- Make sure you understand who has the decision making power over critical elements of the process.
- Do you have team members with the necessary skills to supplement or take over the job if the outsourcing does not work?
- Be aware that you may lose experienced talent because you are outsourcing. Key employees could leave the company, and another talented prospect may overlook your company because you outsource jobs.
- The outsourcing partner may deny liability for injuries caused by the product.
Outsourcing can provide many benefits to a company, in addition to saving money on overhead. Outsourcing can result in:
- A sharper focus on the other areas of the company, including the central core of the business.
- A much larger talent pool to choose from, and access to more technology.
- Greater control over the process.
- Clear accountability written into contracts.
- The ability to balance peak seasons by retaining additional outsourcing partners.
If you intend to outsource some or all of a process, talk with a business lawyer in Coral Springs, Parkland, and Broward County before signing contracts that bind your business. A lawyer can weigh the pros and cons of outsourcing to decide if the potential risks are worth the benefits.
Contact a Coral Springs, Parkland and Broward County Business Lawyer for Help
Attorney Matthew Fornaro is an experienced, skilled, and highly-trained business lawyer. He handles all matters related to your company, including representing you in court when it is necessary to protect your best interests.
If you have questions about outsourcing, call our office at 954-324-3651 or contact us online to schedule a consultation with the attorney.