Why Do Companies Outsource Jobs – Practical Advice

Why do companies, specifically American companies, outsource? This question is a pretty loaded one because it comes with a lot of misconceptions. What most people see outsourcing done wrong. That’s exploitative and it doesn’t help the companies or the people they outsource to.

What I’m going to show you are the right reasons why companies outsource. And when they start with the right intentions, they often outsource the right way. 

  1. The cost of living in other countries is cheaper, especially in the Philippines. It’s around 10x more expensive here in the US. That means if I want to hire, let’s say, a American graphic designer who’s just experienced as Elijah (my Filipino graphic designer), I would have to pay 10x as much. Maybe even more. Even if I double or triple my VAs salaries it would still be cheaper compared to hiring locally.  And if you’re a small business, if you can get great work for a lot less, why wouldn’t you take advantage of that?. 
  2. When you hire locally, you’re limited to your local labor pool. When you outsource, you have an entire country’s worker pool to choose from. This increases your chance of finding a worker. 
  3. There’s low commitment. You don’t need to buy equipment, rent an office. Filipino VAs have their own computers and work from home. Easier to let them go when things don’t work out.
  4. No overhead. You don’t have insurance or office costs.
  5. There’s no government red tape. You don’t need to fill up a W2, 1099 and a ton of other forms on triplicate. You don’t need to worry about that when you have a Filipino VA. All you need is a W8-BEN.
  6. Outsourcing isn’t about sending jobs overseas. That’s a misconception. No business owner wants to take away jobs from their community. Often, it’s about not being able to afford to hire locally. And that’s why we outsource. We hire a VA and wait until we’re profitable enough then hire someone locally. That way you’re creating quality jobs that give your local employees a good wage.

I’ve seen all kinds of situations in outsourcing. Over the years, I’ve seen that the best way is to leverage the system in the Philippines to get things done and grow your business. If you want to know how to do it, go to Outsourcing Lever and get my book. It’s free! All you need to do is pay for shipping.

You can also check out how to get started on hiring Rockstar Virtual Assistants.

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About John Jonas

John Jonas is a long-time outsourcing expert and the creator of OnlineJobs.ph.

Since 2005, John has taught hundreds of thousands of entrepreneurs how to profitably delegate to VAs in the Philippines (and get their lives back in the process).

With help from his own VAs based in the Philippines, John has created an outsourcing empire that allows him to work 17 hours/week and to spend most of his time with his wife and 5 kids.

Find John at JohnJonas.com and Facebook.

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