It’s no secret that outsourcing is a great way for businesses to save money on all kinds of otherwise costly tasks. Fortune 500 companies have been taking advantage of outsourcing for decades now, giving them what many “mom and pop” businesses would call an “unfair advantage” in the marketplace.
Regardless of your feelings about outsourcing, it’s long since become standard procedure for companies looking to cut costs and boost revenues. That’s because it’s highly effective. It’s also extremely misunderstood.
One of the biggest misconceptions about “outsourcing” is that it takes place overseas. Sure, a lot of it does; but most business owners would be surprised how much outsourcing is completed in their own backyards, figuratively of course.
On the bright side, outsourcing has given tons of entrepreneurs the ability to launch companies quickly and realize opportunities that literally wouldn’t have been possible if it weren’t for the availability of inexpensive, freelance labor — both abroad and in the US. These opportunities have given millions of freelance designers, programmers, and data specialists the ability to find work wherever it’s available.
One of the biggest misconceptions about outsourcing is that freelance workers typically get the short end of the stick. While it’s true that outsourcers typically charge a below retail rate for their work, they’re often following a strategy that the mega-corps that hire them use all the time — trial offers.
You can call these services “loss leaders” or “free trials,” whatever terminology you think best applies. The truth is that, more and more, cheap online outsourcing has been transformed into a client-hunting strategy for freelancers… a surprising number of whom reside inside the United States.
Project Outsourcing for Local Businesses
So you’re probably wondering how this could help you, right? Just for the record, I’m not suggesting that you go on Craigslist and offer your services at a hefty discount as a client recruiting strategy…
Because, you see, there are already thousands of people who are doing this. You can find them all over web, on sites like Fiverr, oDesk, and Tenrr.
Instead, I’m interested in how these outsourcing hubs and can be leveraged to help local businesses. Honestly, outsourcing hubs like Fiverr could (and should) be a revolutionary tool for local businesses.
After all, it’s the “mom and pop” shops that have to compete with major companies, all of whom have taken advantage of the virtual labor market. So, what’s standing in their way?
It’s the learning curve… and the fear of the unknown. That’s precisely where most lucrative opportunity lies.
Overcoming the Accessibility Gap
The biggest hurdle between local businesses and all of this cheap and abundant skilled labor is simply a little bit of research and know-how. Local business owners haven’t invested the time to learn about outsourcing and they’re quite simply too swamped to learn about it.
In practice, outsourcing is like any other business. We could all buy our own car insurance or sell our own houses if we had the time to study all of the rules and regulations, but we typically outsource these tasks to agents. The same is true for outsourcing tasks for local businesses.
Business owners are too busy with their daily activities to learn how to hire inexpensive freelancers online, even though it could drastically improve their profitability. In fact, that’s exactly why they need outsourcers in the first place.
Instead of managing these tasks themselves, business owners need a person that they trust to oversee the task… an outsourcing coordinator, if you will.
Providing a New Client Service
An outsourcing coordinator’s job is relatively simple: To seek out work that your clients need to have done and broker the services via Fiverr, oDesk, Elance, etc.
As a virtual project manager of sorts, the cost to you is as little as five bucks, and often for a service you can charge a client upwards of $50 or $100 for. As you form relationships with a network of skilled and dependable outsourcers, you can bundle services for below-market rates, and still pocket a healthy mark-up.
The profit margins are up to you, but if you were to bundle three or four useful services on Fiverr and charge $100 a piece for your troubles… I’ll let you do the math.
The important thing is that you take on the burden of managing this work and deliver a satisfactory result. Because, as you already know, word-of-mouth and referral selling is the key to opening the floodgates of new business.
Make no mistake, there’s incredible value in taking over necessary tasks for overworked business owners. If you currently operate a service-based business, such as consulting, coaching, or design, then you already understand how great the need is for small business outsourcing.
Leveling the Playing Field
By providing local businesses with access to inexpensive labor, project managers can help reproduce the business models of some of the world’s most profitable companies… on both sides of the equation.
Think about it; the largest service-based companies in the world rely on a series of subcontracted services to keep their prices competitive. That’s because the major service providers know how important it is to compete on the basis of price.
The more inexpensive, outsourced labor a company can secure, the larger its client base can grow. These outsourcing contracts can be game-changers when it comes to getting an edge on the competition. I think you can see where I’m going with this.
The outsourcing management industry has long been used to increase profitability at large companies, while shifting the competitive advantage away from smaller, locally-based businesses. However, by following in the footsteps of these business behemoths, project managers can help grow other small businesses while also growing their own.
[Ed. Note. Ryan Deiss is a 10 year Online Publishing Veteran, and at the age of 30 Ryan has become a widely followed and respected publishing Guru releasing countless reports and courses on subjects ranging from Social Media to Continuity Programs and SEO. You can read more about Ryan and his quest for financial independence here. And you can learn more about how to use outsourcing to gain financial independence at FreedomFivePlan.com]
The New Outsourcing,