How many full-time employees does it take to run a successful company? Throughout history, the answer has changed – and it’s changing again.
Up until about 200 years ago, the vast majority of businesses were family-run: a private citizen might be very good at building houses, or at designing clothes…and as demand for the skilled laborer’s services or products grew, family members would gather to handle the increased workload. Companies were born, but they also regularly failed if there were no trusted family members to help out. (This fascinating Wikipedia entry lists the oldest companies in the world. There really aren’t that many.)
The Industrial Revolution created larger companies, with actual employees (and paying them created an agreement of trust). If you didn’t have locally-sourced skilled labor, performing quality work on location, your business couldn’t possibly succeed.
As recently as 10 years ago, even as the Internet was well into its teenage years, a very low percentage of work was done remotely. If you worked for a company like Google, or ComputerLand, or Sears, or Nobu Sushi, you generally worked at one of the company’s physical locations. If, as the CEO of a mid-sized company, you needed to run an advertising campaign, or you weren’t happy with your IT team, or your best delivery driver just quit…you went to your in-house HR team, and they put an ad online (or in the newspaper!) to find a new resource. When you hired someone, they’d likely be a local full-time employee, with benefits, and possibly a desk and an office. And certainly, some businesses are still run this way today.
But things are clearly changing…and they were changing before the pandemic. Of course, starting in early 2020, companies needed to quickly rethink their business strategies to flexibly manage the rapid social and economic changes brought on by the COVID-19 pandemic, and remote workers were embraced like never before.
While certain industries – like starting a restaurant, or launching a hotel chain – still require a lease for a physical location, the purchase of expensive equipment and furnishings, and the hiring of local employees…these days, it’s very possible for a private citizen to have an idea…and then create a multi-million dollar company without hiring a single other full-time employee.
Let’s say I’m starting a furniture store. Previously, I would need to hire:
- Designers (to design the furniture)
- Manufacturers (to put together the furniture)
- Marketers (to create ads to attract customers, and to run search engine marketing campaigns, as well as ensure that my SEO (search engine optimization) is driving search traffic to the site)
- A financial division (possibly including a CFO, to manage the money)
- An HR department (to find/hire/manage employees, and all that goes with hiring an employee)
- A web division (to run the website, and manage the inventory and online sales)
- A shipping division (to manage the inventory, and ship product)
- A customer service division (to manage user issues and feedback)
- An IT division (to manage both internal and external technology issues, as well as security)
This list could extend, depending on the type of business. You might need some software engineers, or a CIO, or a separate accounting division, or a personal assistant.
Recognizing that individual businesses certainly require some specialized roles…for the moment, let’s assume that this is a complete list or resources that any large company might need. Well…EVERY SINGLE ONE of these roles can now be outsourced. There are companies that you can hire to either completely take over a certain element of the business – or at the very least, augment your existing staff. (And if you don’t have existing staff, well, these outsourced companies essentially become your staff.)
It’s strange to think about, but there are many advantages that these companies have over in-house employees, including:
- They’re typically experts in the field that you need (often better than an in-house employee might be)
- HR issues are minimized (if you don’t like the IT professional you’ve been assigned, you can just ask for a different one…or if your customer service rep has a death in the family or finds a better job, you’re not responsible for replacing the resource)
- They can often be less expensive than full-time employees (no benefits, no 401K plans), AND there are many roles that don’t require a full-time resource in the first place
- They can cover many different roles within the same expertise (it might be hard to have an internal web team that can handle design and technology issues, and you might not need a full-time role for either)
- There can be huge economies of scale (drop shippers can eliminate the need to store inventory; recruiters can draw from a large, combined source of resources when hiring)
- And if you don’t like the service you’re getting from one outsourced company, the competition is such that you can replace them with another (without having to fire an employee); competition also keeps the market/prices in check
Not to mention the fact that allowing experts to handle a specific area of your business allows you to focus on your core competencies; most creative CEOs don’t want to learn how to code in Java.
So why would you ever hire another employee? Well, outsourcing is never going to be a perfect solution, and it may never create loyal, long-time employees. It can be very difficult to find a third-party company that treats your business as their livelihood. But if you CAN find the right company – one that treats your business’ success as if it were their own – it can be an incredible, growth-creating, stress-relieving arrangement. In my experience, there’s only one way to ensure that you’re finding the right partner:
They have to be referred, by someone you trust.
Someone that you already trust has to trust the company being referred (or, at the very least, they need to FEEL trustworthy, appear to understand your needs, and make you feel prioritized). Ask your friends. Use LinkedIn, or Twitter, or Facebook, and let your network tell you if they know of a good marketing firm, or IT company, or accounting firm. When people trust other people, they’re always willing to pass that info on. (One of my favorite quotes: “Choose people who will say your name in a roomful of opportunities.”)
As the acting Chief Marketing Officer for Infracore, it’s nice to be a part of one of those trusted companies; in my experience, no one is ever disappointed with Infracore’s IT-related services. But if you need IT services, don’t take my word for it: find someone you trust that already trusts us.
Doing business today demands that companies have the right technologies, processes, and people skills. Outsourcing has changed things: it provides another way to grow an emerging company, or strengthen an established one. The advantages that outsourcing provides often outweigh the negatives, but just having an option to offload the parts of a business that don’t line up with key employees’ strengths can be the difference between success and failure.