Outsourcing has become a major trend in human resources over thepast decade. It’s the practice of sending certain job functionsoutside a company instead of handling them in house. More and morecompanies, large and small, are turning to outsourcing as a way togrow while restraining payroll and overhead costs. How can you makeit work for your business?
First, make sure the company you’re hiring can really do thejob. That means getting (and checking) references. Ask former orcurrent clients about their satisfaction with the client. Find outwhat industries and what type of workload the firm or individual isaccustomed to handling. Can you expect your deadlines to be met, orwill your small business’s projects be pushed aside if a biggerclient has an emergency?
Also, make sure you feel comfortable with who will be doing thework and that you can discuss your concerns and needs openly. Askto see samples of work if appropriate (if you’re using a graphicdesign firm, for example).
One outsourcing option is to hire independent contractors.Instead of hiring an in-house bookkeeper, for example, you mightoutsource the job to an independent accountant who comes in once amonth or does all the work off-site. Independent contractors can bemore flexible and lower in cost than outsourcing firms. As withoutsourcing firms, however, before hiring an independentcontractor, make sure the individual you use can do the job.
If your outsourcing needs are handled by an individual, you’redealing with an independent contractor. The IRS has stringent rulesregulating exactly who is and is not considered an independentcontractor. The risk: If you consider a person an independentcontractor and the IRS later reclassifies him or her as anemployee, you could be liable for that person’s Social Securitytaxes and a wide range of other costs and penalties.
