3 reasons why outsourcing could support businesses and save the economy

First Published by MHR.

Strategies to support businesses and people during economic crisis.

Almost two years ago, I wrote this blog for eLearning Industry: 4 Practical Tips To Inspire Learning In Your Business. One of the tips was about working ‘with experienced […] freelancers to draw from their expertise’. My reasoning behind this was that if money is tight, some departments do not receive any funding or budget allocations. Outsourcing to freelancers is a great option as you can work with them on a flexible basis, rather than having to justify the money for a(nother) employee.

The gig economy has been growing for a while now. Outsourcing certain functions including people development, marketing, accounting, HR, even assembling products, has been a huge cost saver for businesses. Unfortunately, due to the pandemic, most of them had to let people go. So, why not give them a chance at becoming their own entrepreneurs?

How it can be done.

Semco, a Brazilian manufacturing giant, did exactly that in the 1980s during one of the worst economic crises the country has experienced to date. They rented out factory space and equipment to previous employees and helped them set up their own businesses. They took on these previous employees as suppliers and allowed them to sell to anyone else, including Semco’s competitors. This saved them a lot of overhead costs, stockpiling and warehousing of unused materials and machinery, and from having to make people redundant without an alternative. They were one of the only companies during that time that did not make a loss and returned profits after just a few months.

Now seems the perfect time for many businesses around the world to try the same: outsource tasks to previous employees, because your finances, marketing, training, all still needs to be done. Work with people you already know and trust on a more ad-hoc basis and help them start their own business.

Why will this help businesses, people and the economy?

Here are my three reasons:

1. Businesses do not have to close because they save on overhead costs.
2. Fewer people are unemployed. They might still need extra help, but they put money back into the economy.
3. People who have a higher stake in their business, aka business owners, are more innovative and likely to improve existing or create better products and services to get people and businesses to spend money.

Here is a little throwback to one of my earlier blog posts about how working less will boost the economy.

What are your thoughts? Do you agree, can you think of more reasons, or do you not believe this could work? Leave a comment. 🙂