The 5th Question You Should Be Asking: How Will a Workforce Solutions Engagement Reduce My Operational Costs?
My answer to the fifth question addresses the cost benefit to your business. Reducing costs has always been important. In an uncertain economy, it is essential. And while cost reduction matters, it should never come at the expense of sound operational performance.
I think that, at this point, the rationale for outsourcing as a means to improve on the performance of non-core functions makes for a sound strategy. You have heard me repeatedly say that asking an expert to do these functions better than you can make good business sense.
Outsourcing non-core functions reduces your headcount, and the HR and line management costs of sourcing, screening, selecting, onboarding, training, reporting and termination of employees. The national median cost per employee for the first four steps in the process just described is $7,300. Every time you need to replace a worker, you incur this cost again and again. This is but one of the indirect cost elements associated with staffing. It makes sense to incur these costs when staffing for the primary business functions that define the core product or service that you are in business to provide. You do this because you are the expert at their production or fulfillment. You invest in technology, process improvement, and training because if you do not, you lose competitive advantage.
“Expertise” means looking at the way a function is presently done and, using best practices and experience, improve on the process required to perform the function. Workforce Solutions is the application of specialized expertise and experience to these functions, delivering a better performance at a lower cost.
The expertise that we have gained over the years in many markets and the continuous improvements in our team training, all have a cost. Because we have many customers, we can effectively reduce the cost of expertise in any one customer’s engagement.
Does it make sense when staffing for ancillary, non-core functions?
The elimination of recurring indirect staffing costs, labor overhead costs, training, and supervision that is achieved when outsourcing non-core functions results in a cost avoidance benefit that flows to your bottom line.