How Much Does it Cost to Outsource Business Tasks?

Written by
Aileen Danna

In a perfect world, we would have a well- paying job that would pay the bills and afford a comfortable lifestyle. We could have it all: the annual family vacation, memberships in exclusive gyms, weekend getaways with the kids and dinner out with friends. But in reality, we can’t really have it all if we don’t have the time to do it all. The best solution is to outsource business tasks which can afford us one item we couldn’t buy for ourselves: time.

We know that in business, time is a precious commodity. The difference between success and failure can literally be measured in seconds and minutes. If you mismanage time, you could miss out on opportunities or cut down your productivity and consequently leave more money on the table.

Over the last 15 years, outsourcing has become an indispensable strategy to grow business. The global outsourcing industry has grown from $45 Billion to $105 Billion and has an estimated market value of $584 Billion. It has been proven to save businesses considerable amounts of money and enhance business productivity; 2 important variables in the profitability equation.

Outsourcing reduces business costs by taking advantage of favorable cost conditions. When you outsource, you are paying only for productive hours. All the costs of operation including overhead are the obligation of the service provider.

In addition, there are economies of scale at work. Outsourcing arrangements often allow multi- tasking of services or a reduction of the rate per hour as work volume increases.

So how much will it cost you to outsource business tasks? It would depend on the type of services you want outsourced.

  1. Administrative Tasks – These are supportive tasks that are often referred to as non- essentials. They are in place to keep the business organized and running. Among the key administrative tasks of a business are as follows:
  • E-mail Filtering
  • Phone Handling
  • Filing and Documentation
  • Calendar Management
  • Appointment Setting
  • Preparation of Presentation Materials
  • Review and Preparation of Contracts

You can outsource administrative work to a Virtual Assistant. The virtual assistance profession has grown exponentially at nearly the same pace as the global outsourcing industry.

Some of the best sources of talent come from remote locations such as the Philippines and India. You can hire a freelancer for $3.50 per hour and $7 for an agency- contracted Virtual Assistant.

While the freelancer is cheaper, there are more advantages to hiring an agency contracted Virtual Assistant.

  • Covered by client- references
  • Equipped with the latest software programs
  • Work is constantly tracked
  • Quality of work is measured and evaluated
  • Highly experienced
  • Receives constant training and re-orientation
  • Can easily be replaced
  • Wider range of skill and competencies
  • Dedicated to your business
  • Flexible work schedule

According to SmartVirtualAssistant, on the average, businesses hire virtual assistants to work 20 hours a week. Hiring an agency- contracted VA will cost you around $560 a month.

Compare that to the cost of a full- time employee at $20 per hour working 8 hours a day and 22 days per month. That is equivalent to $3,520 in basic salary. If you add benefits, you are looking at total employment cost of $4,928 to $7,040!

  1. Highly Specialized or Technical Tasks – Highly specialized tasks or those that require technical skills will generally cost higher. This is because you are paying a premium for certification, licensure and advanced training that the outsourced talent invested on.

Highly specialized tasks may fall under a newer branch of outsourcing called Knowledge Process Outsourcing or KPO. India and the Philippines are the preferred destinations for these services because of the affordability of talent and the quality of work.

Examples of KPO services and estimated costs are as follows:

  • Preparation of architectural blueprints – $25 to $35 per hour
  • Market research – $15 to $25 per hour
  • Legal research – $15 to $25 per hour
  • Biotechnology research – $25 to $35 per hour
  • Medical Coding and Billing – $35 to $45 per hour
  • Transcription services – $0.12 per line (Medical), $3.50 per minute (Legal)
  • Animation and Computer Graphics –  $25 to $35 per hour

Please take note these rates are inclusive of overhead. In developed economies, the average salary of a market researcher is $25 per hour. Assuming that salaries are kept at 25% of revenues, estimated overhead would be $100 per hour.

  1. Content Writing – One of the fastest rising jobs that is outsourced is content writing. This is because content marketing is highly in demand. Inbound marketing agencies are always on the lookout for good content writers who are not only capable wordsmiths but are proficient in the use of keywords.

Content writers will charge depending on the number of words, the amount of research to be conducted, style of writing and other guidelines such as inclusion of keyword research.

Rates will range from $5 to as $15 for the first 500 words. Those who charge $5 are usually first- time freelance writers while those at $15 have the experience and track record to justify their rate. Always ask for work samples, a link to their published work or subject them to paid test.

For SEO purposes, a blog should at least be 1,600 words. Based on the average rates, you should expect to pay between $15 to $50 per blog.

Assuming that you should publish a blog at least three times per week, outsourcing content writing may cost you $600 per month.

  1. Digital Marketing Services – Digital marketing services involve a team. Its composition will depend on where you are in business development. The standard set up includes:
  • Digital Marketer / Project Manager
  • Web Designer / Developer
  • SEO Professional
  • Social Media Marketer
  • Content Writer
  • Graphic Artist

You do not need a web designer or a graphic artist if you already have a website and active social media accounts. However, they must be available for the Digital Marketer and SEO Professional to consult with.

You can outsource digital marketing services for as low as $1,500 per month and this includes the standard set up:

  • Research
  • Preparation of Creative or Campaign Brief
  • Preparation of Calendar of Activities
  • Preparation of Press Releases
  • Social Media Posting
  • Blogging Publication
  • Engagement
  • Analytics

More extensive packages may reach up to $10,000 per month. This may include setting up of pod casts, video interviews, online pressers, meetings with influencers and online advertising among others.

  1. Full- Scale Outsourcing Services – If you are planning to outsource full- scale services to a third party provider, you would save more money if you were to contract a partner from the Philippines or India.

In the Philippines, Business Process Outsourcing or BPO operations is quoted on a per hour per seat per day basis. The average hourly rate is $9 to $12. The rate includes the following:

  • Salaries – Management and Staff
  • Benefits – Management and Staff
  • Rent
  • Primary Internet
  • Secondary Internet
  • Power
  • Water
  • Association Dues
  • Disaster Recovery Measures
  • Office Supplies
  • Contingencies

Thus, if you were to contract the services of a full- scale customer service group from the Philippines assuming it would require 10 seats working 8 hours per day and 22 days per month, your monthly cost would be calculated as follows:

$9 per hour x 8 hours x 10 seats x 22 days = $15,840 per month

By way of comparison, in the United States, Australia or Canada a 10- person customer service team would cost:

$20 per hour x 8 hours x 10 people x 22 days = $35,200

Factor in benefits and estimated total compensation will be at $49,280 to $70,400. Assuming labor is kept at 25% of revenues, estimated monthly cost of operations is $140,800.  

One important item you need to know is that many outsourcing agencies will require a bond to cover the first month of operation. The bond serves 2 purposes:

  • Covers cost of operations at least for the first 15 to 45 days until first official invoice is paid.
  • Acts as seed money to cover improvements in leasehold and infrastructure.

As you have read, the cost savings to be realized from outsourcing business tasks are too significant to ignore. While these remain estimates, you now have a benchmark on how to fund your outsourcing venture.

Article Categories:
Business

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