Having too much demand for your time isn’t a bad problem to have. You can use it as a justification to raise your rates, earn goodwill and commissions through referrals, or invest in additional resources to support and grow your business. It can be daunting to start outsourcing and subcontracting work when you’re self-employed, but the benefits can be enormous.
Most freelancers, contractors and business owners will say that they became self-employed to have more control and autonomy over their careers. And it can be difficult to trust anyone else to meet your standards, especially when reputation can be so important in winning new clients and customers.
But outsourcing and sub-contracting can actually improve quality and reliability, and allow you to focus on the areas of your business where you can have the greatest impact. Especially if you’re able to delegate time-consuming business admin or tasks.
The market for subcontracting is large enough that some white label agencies exist solely to provide their services under your brand name. And many freelancers can build successful careers as an outsourced or subcontracted resource.
What are outsourcing and subcontracting?
Outsourcing simply means obtaining goods or services from an external provider. That could include hiring an accountant or a virtual assistant. Generally, it’s a way to reduce costs and overheads by permanently allocating tasks to another person or business. But it’s often misused to also include subcontracting by many people.
Subcontracting is when a person or business undertakes part, or all, of the obligations of a larger project. It’s often a way to bring in specialists with skills that you don’t have, along with providing additional labour as needed. A web designer might need to organise the hiring of developers to deliver a new website, or print specialists for a rebranding project. Subcontracting allows you to take responsibility, and payment, for the full project, rather than just one part of it.
Why you should consider outsourcing
With enough time and practice, you can probably complete a perfectly adequate tax return for your business each year. But if your day rate is £350 and it takes you five working days which aren’t spent on client projects, that return will have cost you £1,750 to complete. If a professional accountant can complete your return in a day for a cost of £1,000, you’ve effectively saved £750.
And a good accountant should be more aware of the latest requirements, ways to save additional money, or existing expenses and benefits that you’re not currently claiming. And unless you’re planning to offer tax returns as a service to clients, it’s a skill that you can’t charge for.
Other areas you may want to consider outsourcing include emails, meetings and general admin via a VA, bookkeeping, IT support, content and marketing, or even coaching.
When to look at subcontracting
As your business and career progresses, there will be times when you might have more opportunities and larger projects than your current resources allow. Bringing in subcontractors allows you to take on those jobs, without the additional cost and responsibility of permanent employees.
It also adds more skills and flexibility to your business. Many agencies offering web design, development and marketing will offer services including copywriting, SEO, social media management and more, without necessarily having enough demand to justify full-time employees.
Sub-contracting provides staff who will look and act as if they’re part of the agency for clients, but will operate as freelancers behind the scenes. And who won’t cost anything if they’re not actively working on a project.
If you’re looking to cover a gap in your skills, win more diverse work and explore new areas, or just need some additional help to fulfil your existing commitments, then it might be time to consider sub-contracting.
How to outsource and subcontract successfully
Handing over tasks and responsibilities can be an enormous help to your business, but it can also lead to problems if you’re not careful. It’s rarely as simple as just sharing some logins and letting a stranger manage your most important clients.
Budgeting some time and resources, particularly at the start of a new working relationship, will pay dividends over time.
- Take time to research and get to know potential suppliers, and check their previous work and portfolio before committing.
- Build up your network of trusted, reliable people who you can contact as needed.
- Make sure any existing agreements and contracts don’t prevent you outsourcing or subcontracting before you let someone else work on them.
- Ensure you have clear outsourcing/subcontractor agreements, including rights to finished work, client confidentiality, and payment agreements (particularly if you may be relying on clients to settle invoices before you’re able to pay anyone yourself). And to avoid them potentially taking over your client for themselves.
- Don’t treat subcontractors as an employee with regards to hours, holiday, etc or they’ll fall foul of IR35 rules.
- Establish clear tasks, responsibilities and how to communicate with clients. You don’t want a subcontractor agreeing to additional work for no charge, or misrepresenting your business in meetings.
- Check that deadlines and milestones are clear and have a process in place for any unexpected delays. Try to allow for subcontractors to be ill or have their own emergencies by including some contingency, just as you would for yourself.
- Don’t test a new person on your biggest clients. Start with smaller projects and tasks to build a working relationship and overcome any initial hurdles.
- Make sure that any required software and equipment is provided, and that any helpful onboarding documents are accessible, such as style and design guides, etc.
- Fair rates and markups are better for long-term relationships with subcontractors. At some point it’s almost inevitable that your client will accidentally mention your fees in a meeting, or comment on the rates they’re paying, and if your subcontractor finds out you’re charging five times what they’re being paid, it’s going to create resentment.
- Be aware of the differences in communication and culture if you’re subcontracting to remote workers. Office banter can be very different if it’s sent in an email, for example.
The downsides of outsourcing and subcontracting work
The disadvantage of relying on third parties is that flexibility goes both ways. They may have other client commitments which you need to work around, or want to increase their own rates due to demand.
Compared to a part-time or full-time employee, there’s much less incentive to provide training and education for a subcontractor who may not work with you on a regular basis. You’ll be relying on them to maintain and grow their knowledge.
Depending on the tasks and roles you’re hiring, there will be different levels of flexibility available. While you may be able to build up the responsibilities of a virtual assistant over time, a marketing specialist probably won’t want to step in and do database entry or sort out an issue with your computer.
How IPSE can help you outsource and subcontract work
As the not-for-profit Self-Employment Association, we support both business owners looking to hire contractors and freelancers, and those individuals themselves, so that both sides can benefit.
- Find contract templates, day rate guides and more in our Downloads section.
- Get advice for taking on your first employees when you’re self-employed.
- Get tips on networking to find new potential subcontractors.
Explore the IPSE Member Directory to find professionals in any industry
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