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How to boost revenue by 21% and sustain 24/7 operation while cutting on direct labor costs?

Your company`s labor costs have skyrocketed, but you do not see employee productivity hence and no revenue increase? Want to sustain round the clock operation without paying overtime?

If so, you are going to love the solution I have to offer.

Before I start, let me just suggest a couple of ideas of how to reduce direct internal labor costs within your company:

Decrease Employee Turnover

With a constant turnover at your company, you are spending a lot on fees and salaries of people involved in employing, recruiting, and training new employees. If their time with you is temporary, the chance is, they are trying to tap you for more.  You will be able to cut down those invisible costs by maintaining a stable employee core.

Cross-Train Employees

Train the employees to perform a variety of operations. Specialists usually get paid more because of their unique skills. Cross-training the employees will enable you to lay off some employees, without affecting productivity of the business.

Minimize Perquisites

Eliminate or reduce perks for everybody including yourself to show the employees that you are serious about cutting business costs. It is essential to start with the management not to worsen the situation.  You can transform existing pension plans into profit-sharing plans and cut costs of health insurance with higher deductibles.

Eliminate overtime

In December 2016 the U.S. Labor Department has passed a new overtime pay threshold of $47,476 for people who work more than 40 hours per week. Before that, the employee was only guaranteed time-and-a-half overtime pay if their income was less than $23,600. As a result, more business owners are required to pay for overtime work to keep their operations running. By eliminating overtime, you would save 1.5 times the hourly rate per hour of work.

Invaluable solution to your problems

There is a way to eliminate overtime, reduce labor costs and increase productivity. You can keep a part of the workforce in-house and apply four suggestions given above to cut down on direct labor costs while outsourcing another less strategic part of the business.

Many American companies have decided to outsource their business overseas in spite of having an option to run it in the United States. More than 2 million American jobs were outsourced in 2016. A large number of them fell within the IT industry, closely followed by distribution, research and development, and call center positions. Some companies outsource all customer care lines. Others only move the lines overseas after normal business hours to enable the increasingly expected 24/7 service. Therefore, all the evening and overnight support calls are answered. Some partners even offer 24/7 active helpdesk, which has quite beneficial effect on the company. If done correctly, longer availability hours can increase customer satisfaction. Moreover, Gartner consulting company also concluded that companies could save 20-30% by outsourcing correctly.

The jumbo companies like Time Warner Inc., The Wall Street Journal and Hershey foods claimed to have outsourced some, or part of their workforce attempting to cut down costs. If you are not ready yet to outsource all of the business functions, start with some of them. I promise you will not be disappointed.

Now let me just digress for a moment and tell you a little about why I am convinced that outsourcing is the best solution. I have been around a transportation business for a while. My brother-in-law owns a taxi company in Los Angeles, which was thriving just until Uber, Lyft, and other ride-sharing apps appeared on the market. The company slowly started to sink. To stay afloat, they outsourced a call center, reduced employee turnover and cut perks for the drivers. Work was outsourced to another country where the time zone was totally different. It proved to be an advantage since the company could maintain 24 hour operation and increased the revenue by 21 per cent.

Face your fears

Besides all the pros of outsourcing, it might seem dubious for some business owners. The common fear and the biggest disadvantage of outsourcing is a possible loss of control over a company’s business processes. It might become difficult to monitor personnel from remote locations. However, it can be avoided by doing a thorough research and picking a reliable provider, who guarantees 100% up-time, preferably has servers in multiple geographic locations and has staff dedicated to making sure customer service call quality is excellent round the clock.

Outsourcing partners usually conduct all the hiring, training, and managing call center agents. If you outsource to a reliable and trustworthy partner, it will not only save you time and headache but also will cut operational costs by 50%. Therefore, outsourcing does not ruin the integrity of a business, if done correctly.

Should you outsource business functions or is it better to keep it in house? Even though there are some common fears, through outsourcing, companies can now offer longer and more flexible service hours, and even sustain 24/7 operation at a price point that won`t break the bank.  So you decide…

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Published inAbout outsourcing/outstaffing

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