The Costs of Managing Remote Workers
Outsourcing, remote workers, and globalization have taken the business world to new heights. The concept has dramatically changed the office working structure. With the change came the benefits and the challenges. Noted advantages of outsourcing include a wider pool of experts, lowered operating and other business costs, and increased efficiencies.
Managing remote workers also has its challenges. Cultural differences, miscommunication, and unmatched expectations can cause business problems. There is also the trust factor, tougher production coordination, and loosening of management control. Hidden costs and charges can potentially wreck your budget. They key is doing research and knowing what you’re getting into.
4 Common Costs of Managing Virtual Employees
Just like local recruitment of employees, outsourcing of freelancers or a service department for your company comes with a cost, albeit much lower. But if you’re not careful, your costs of outsourcing remote workers could be as much or more than traditional staffing. Here are the most common costs of outsourcing;
Payroll Remittance Fees
Salary and pay rates of offshore and outsourced workers are significantly lower than local rates. This is the main reason companies outsource. However, paying your remote employees is not as simple as setting up a payroll account and depositing their pay. Sending money internationally has never been an easy process, and comes with additional costs. Money transfer through banks and other institutions charge an average of $25 USD per transaction or 5-7% of the amount wired. The percentage is even higher when sending lower amounts.
Stable and reliable communication lines are vital to business organizations. This is not an issue when you’re hiring locally as you can always see and talk to your team in person. But when you go global, setting up your company’s communication system is a must. Thankfully, there are a lot of affordable or free options available to communicate internationally. Skype, Facebook, Google Hangouts, WhatsApp, and KakaoTalk are just some of the applications you can use to communicate with your offshore employees. However, you still have to pay for a strong and stable internet connection.
Software and Clouding Infrastructure outsourcing your business processes also means knocking down the four walls of your traditional office. Software and cloud infrastructures are key aspects to adopting the virtual office setup. Your virtual office system should enable you and your offshore team to work seamlessly and efficiently. Vital applications include cloud storage, documents sharing, tasks management platforms. While some are offered for free, the scope of service is limited compared to paid subscriptions.
Additional Offshore Management Costs
Aside from the savings, the main purpose of outsourcing is to delegate and streamline your business processes. Thus, the need for a capable and reliable management team to supervise workers abroad. This is especially true when hiring more than five employees. Most BPO companies in Asia and South America offer teams composed of at least one manager and one quality control officer. While you are most likely advertised the per hour per person cost. Beware of the management fees, legal fees, and other add-on costs.
Whether you are hiring local or offshoring, staffing costs money. From posting your ads, interviewing, and training new hires, the process is expensive. The costs are higher in outsourcing. Top freelancing platforms online require employers to pay memberships subscriptions or service fees. Aside from the salaries, you are also paying the cost of finding the employee. Upwork charges 2.75% processing fee from employers and 20% from the workers. PeoplePerHour charges 15% on the first $280 USD of the month and 3.5% for the rest. Freelancer.com charges 3% or $3 USD whichever is higher per contract.
The business trend is clearly going global. Despite the challenges and the costs, the benefits still far outweigh. Forward-thinking companies are going global in their operations, processes, and solutions. To cope up with the staffing demands, it looks like outsourcing and virtual offices are the best solutions.
There are no going around global markets. Sooner or later, businesses will have to adopt the global and virtual offices. The best way to confront the dilemma is to embrace change, move forward, and be the innovator. But first, you must know your options.