Struggling to Cope With Higher Costs? 4 Ways Outsourcing During Inflation Can Help

Outsourcing during inflation may sound counterintuitive, but off-loading less important tasks (so you can focus your efforts on the essentials) is an efficient way to cut costs.

outsourcing during inflation

With inflation rates at their highest in decades, small business owners are now scrambling to sustain their ventures during these uncertain times. And with less money to spend and supply chain challenges still rampant, companies are also looking for strategic ways to do more with fewer resources.

It should come as little surprise that many are considering outsourcing work and utilizing web-based technology to support their operations. Let’s take a closer look at outsourcing and automation and why small businesses use these tools to cut costs and fight rising prices in today’s inflated environment.

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    Why Outsourcing and Digitization Are a Solution to Rising Costs

    Small businesses don’t have the deep pockets or vast financial resources that larger companies and enterprises do. This means they’re particularly vulnerable to the effects of inflation, such as rising prices and manufacturing supply chain issues. All in all, these effects increase the cost of doing business for owners.

    Off-loading certain tasks that aren’t essential to the purpose of your business—through either outsourcing or automation—can help. In particular, outsourcing allows companies to hand off some of their non-critical tasks to third-party service providers like freelancers, contractors, or agencies. They perform these responsibilities on behalf of the business, often for less than it would cost to hire an in-house expert or team.

    Below, we’ll look at 4 ways outsourcing can support your business’s bottom line during high inflationary periods.

    Dream big

    4 Ways Outsourcing Can Help Your Small Business

    1. Reduces Your Overhead Costs

    Labor costs can easily make up about 70% of a business’s total expenses (and that percentage rises even higher for service-based businesses). As a result, companies looking to manage costs will often look at this part of their budget first.

    Outsourcing and automation allow organizations to reduce costs without impacting productivity and efficiency. Third-party providers will typically charge a set price for the services they offer. This upfront pricing helps you budget more accurately in comparison to work performed by employees, as factors like overtime pay can dramatically impact the cost of performing these tasks in-house.

    And because these providers often supply their own equipment or work outside of your organization (or, in terms of automation, are typically software solutions), you’ll spend less on equipment, software, office supplies, and office space as well. By reducing your overhead, you can put the money you save toward investments that position your business for success in an unstable economy.

    2. Saves You Time

    Outsourcing and automation enable companies to do more work in less time—all while maintaining the quality of their work. By handing off non-core operations, your in-house team can give higher value initiatives their undivided attention.

    Depending on the company, some of these tasks may require larger teams if performed internally. Outsourcing not only reduces the need for teams of that size but also saves time spent on managing others so you can dedicate more of your time to growing the business.

    Additionally, outsourced work is often given to third parties specializing in a particular area. Their knowledge, experience, processes, and tools help them complete their duties more efficiently (and yes, sometimes even better) than your own team can. And if you’re using an automated tool, those processes are baked into the software. All the manual labor is done behind the scenes, so you don’t have to.

    3. Offers You Scalability

    Outsourcing and automation also allow you to scale your headcount or the extent of your business activities up or down as needed—without needing layoffs or hiring new employees. This is especially important during uncertain times like these, as businesses need to be prepared for every possibility.

    Small businesses also can’t afford to hire experts in each field or an entire team for every area of their operations.

    Outsourcing human resources (HR) and other administrative tasks give you access to the experts you need when you need them. This way, you don’t pay an accountant or legal expert for a full day of work when you only need a few hours of their time. Since you’re only working with them for a short amount of time, you can also expect to pay a much more affordable rate than if you were to hire them outright.

    Additionally, automating your work processes with third-party software providers offers flexibility not available with in-house teams. Many of these companies use a tiered pricing model for their services, so scaling your operations up or down is as simple as upgrading or downgrading your current service tier.

    4. Makes You More Competitive

    When you outsource your non-core business tasks to specialized third parties, you typically get better results in return. These people earn a living doing the tasks you hire them to do, whereas employees working on the same tasks in a small business may only spend a few hours of their work week on it.

    Thanks to their years of experience, third-party providers have more familiarity with their specialty, are better able to solve problems that come up, and will experience fewer delays and setbacks in their delivery of the work. Some vendors may even offer their employees training, so they stay up to date with best practices and the latest trends in the field—meaning you also get to take advantage of these investments when you work with them.

    Outsourcing business activities to industry experts offers other benefits as well. For instance, the more they learn about your organization, the better positioned they are to suggest improvements in the processes they’re involved in. And thanks to the time and resources that outsourcing saves your business, you’re better able to grow your company with a more productive workforce.

    Similarly, automating your business processes gives you a leg up on the competition. When you automate your customer service efforts with chatbots, for instance, prospective buyers can find the answers they need in seconds—driving even more purchases while offering immediate assistance for the shoppers who need it. All the money you save with automation can finance new initiatives that put you ahead of your competitors.

    Still unsure whether outsourcing and automation are right for your small business? Read up on outsourcing and automation to help you make your decision.

    What Tasks Can Your Business Outsource?

    When you decide to outsource your work, the most important thing to remember is that you should always aim to outsource non-core business tasks rather than ones important to your venture. A good rule of thumb: If an activity isn’t generating revenue for your company, you might want to consider outsourcing it.

    Perhaps, as a result, most outsourced work includes back office and administrative services that require specialized knowledge but may not necessarily contribute to business growth.

    In fact, a 2019 Clutch survey found that small businesses tend to outsource tasks that require technical expertise, including:

    • Accounting (37%)
    • Information technology (IT) services (37%)
    • Digital marketing (34%)

    Here are a few areas you’ll want to look at when considering what work to outsource for your own business.


    Accounting is a necessary business function that demands expertise but doesn’t generate income for your business in the way that, say, sales would.

    Understanding accounting basics is imperative for a business owner. But, educating yourself on the intricacies of this business function may not be the best use of your time. And any mistakes or missteps could result in penalties or legal action against you.

    That’s where outsourcing to an accountant can help. The right one will be able to help you with responsibilities such as filing taxes, bookkeeping, and compliance.

    Furthermore, using automated accounting software like FreshBooks can support additional financial functions that don’t require oversight from an accounting expert, such as invoicing, payments, expense management, and reporting. This means you’ll only need to hire an accountant for the essentials your accounting software can’t manage on its own—offering you even more cost savings.

    Human Resources

    As your business grows, you’ll also have many more responsibilities to tend to when it comes to your employees. This isn’t a duty to take lightly either—failing to follow proper procedures and regulations with hiring employees, payroll, worker benefits, and more could also cost you in terms of fines and other penalties.

    So, it pays to have an HR expert on call that knows and understands the laws that apply to your business.

    By outsourcing payroll services and other HR tasks, you can rest easy knowing that this tedious yet crucial responsibility is handled by a pro who understands the regulations that are specific to your industry and jurisdiction.


    Marketing is important to the success of every small business. However, it’s not easy to get right, especially as a first-time business owner. It’s also time-consuming, which can make it difficult for employers who wear multiple hats to succeed with their efforts.

    Given how fast social media algorithms and marketing platforms change nowadays, you’ll also need to spend significant time learning about the latest updates and how they affect your current marketing strategy.

    Luckily, you can avoid all this by hiring a marketing agency—or maybe even multiple freelancers—to support your operations. Not only will they be experts in the services you bring them on for, but they’re also more likely to keep up their learning to remain competitive.

    It’s clearly working for some businesses, too—a recent Semrush report indicated that, although 51% of businesses only create written content internally, 12% fully rely on outside writers to do the work, while 37% use a mix of both methods.

    3 Tips to Make Outsourcing a Success for Your Business

    1. Outsource Your Work With Purpose

    Don’t outsource certain business functions just to make things easier for you. Consider whether outsourcing the task you have in mind is the best use of your resources, especially with the current significant price increases across the board.

    Ask yourself: Do you have the experience and know-how to conduct these tasks? If not, are you able to learn and execute the essentials quickly?

    As mentioned earlier, you still want to have your employees in charge of your core business operations. But in addition to keeping these duties in-house, you’ll also want to avoid outsourcing responsibilities that require a lot of hand-holding from you. Constantly keeping tabs on these activities takes time away from your own tasks. So, you will not only be less productive overall, you’ll also be paying for the added inconvenience.

    2. Choose Your Service Provider with Care

    Because you’re essentially handing over a part of your business to a person outside your organization, it’s important to choose your provider carefully.

    Before you sign that contract, make sure to do your due diligence with your vendors. Some questions you’ll want to ask include:

    • What experience do you have working with businesses like mine?
    • How long have you been doing this type of work?
    • Who exactly will be working on my business?
    • How will you communicate with my team?
    • What does your onboarding process look like?

    Look for a vendor who has worked in the same capacity before and can highlight successes they’ve had with other companies. To go the extra mile, ask them for a few current or past client testimonials, so you can understand what it’s really like to work with them.

    As you vet each provider, also make sure to communicate your expectations and ask what they expect from you as well. You want to weed out any contenders who aren’t a good fit right away.

    3. Automate Work Where Possible

    As an alternative to outsourcing, you should also assess your business activities and determine if there are any that can be automated with the help of software or other tools.

    For example, social media scheduling software and email marketing software can be used to schedule out social media posts and email blasts (respectively) in advance, so your team has one less thing to worry about during their work day.

    Similarly, FreshBooks’ accounting software helps you automate as much of your invoicing process as you like, with automatic reminders for overdue payments, recurring invoices, and even recurring client charges. With powerful financial software, you can spend less time on getting paid and more time on the work that gets you paid.

    You may even want to consider automating as many tasks as possible before you begin your outsourcing efforts. This helps you free up your resources to leverage them in the best way possible. In most cases, automation software will be much less of an investment than an outsourced team.

    Read this blog post for more information on the kind of tasks that can be automated in your business.

    accounting software checklist

    How FreshBooks can Support Your Business During High Inflationary Times

    No matter how you structure your small business, FreshBooks helps you manage time-consuming business tasks so you can continue to do the work you love most.

    Use FreshBooks as a tool to manage the tasks you outsource to contractors, freelancers, and agencies. Our software’s project management and time tracking capabilities encourage deeper collaboration with you, your trusted service providers, and your clients.

    And thanks to detailed financial reports—all available automatically with a few clicks—you can make better decisions about the health of your business. You’ll have an accurate understanding of what’s going on with your revenue and expenses at all times.

    And if you don’t have the cash to outsource your accounting duties just yet, FreshBooks has you covered. With its suite of powerful features, including double-entry accounting, bank reconciliation, and comprehensive financial reports, you’ll be better prepared for tax season and always know where your business stands.

    When your business grows to the point that you need to bring on an accounting team, know that they can continue to use FreshBooks to post journal entries, update your chart of accounts, file your taxes, and run crucial reports—thanks to an all-in-one software with assigned user permissions.

    Take a look at this freelancer’s firsthand account of how much time she saved with FreshBooks.

    The Secret Weapon for Controlling Higher Costs

    Regardless of the state of the economy, outsourcing and automation are great tools to leverage for companies looking to make the most of their resources.

    But when inflation is on the rise, these tools also become invaluable for smaller companies looking to turn their setbacks during this time into a setup for something greater.

    Ready to learn how FreshBooks can transform the way your business operates? Give us a try for 30 days, free of charge.

    Feli Oliveros

    Written by Feli Oliveros, Freelance Contributor

    Posted on August 24, 2022