Inflation has now become the new trending word in the business world. Inflation refers to the rate of increase in prices over a given period. Most of the time, it is caused by the imbalance in demand and supply, during which demand is more and supply is sparse. The Federal Reserve targets an annual inflation rate of 2%. Still, The labour department has reported that the September Consumer Price Index (CPI) rose to 8.2%, which is higher than what experts had predicted. According to Labour Statistics, inflation increased to 8.6 % in May, the highest increase since December 1981.
There’s no doubt about how hard the U.S economy has been hit by inflation, and it’s probably going toward another recession phase. Russia’s invasion of Ukraine and Covid – 19 lockdown in China is causing after-pandemic supply chain shortages, policy-fueled demands, labour shortages, and other supply-side disruptions. The prices are increasing for everything as the dollar loses its value and doesn’t hold its purchasing power as it had before.
How does inflation affect businesses?
Inflation has raised an alarming situation for the business market in the U.S, causing less free cash for clients to spend on services and products. The cost of doing business also increases. The employees also suffer from pay cuts leading to decreased employee satisfaction, retention, engagement, and productivity. Companies have to face the following:
- Increased cost of raw materials
- Increased wages
- Supply chain disruptions
- Overhead increases
- Increased inventory cost
Companies also face challenges in expansion as there are higher interest rates, impeded investments, and fluctuating foreign currency exchange rates. There’s also a drastic change in customer behaviour during inflation. There’s a decrease in demand for discretionary goods and a temporary increase in demand for long-term goods.
Seeing the current scenario, companies need a better financial strategic plan to survive inflation. They need to have out-of-the-box thinking to cut expenses without compromising on getting quality content. This is where outsourcing and hiring virtual assistants becomes the best alternative. According to Mr. Boland and Dr. Block from the Holy Cross College in Worcester, Massachusetts, outsourcing can save a minimum of 9% of savings. Outsourcing refers to the business practice of hiring an outside party to perform services or create goods that the company’s employees and staff traditionally performed. Outsourcing can help the company in many ways:
1. Reducing overhead costs
Most of the time, 70 % of the total expense is taken up by the labour force in companies and businesses, which rises higher for service-based companies. Outsourcing can help significantly to cut those expenses without hampering productivity and efficiency. It also benefits as the third party charges a set price for the task, which allows for better budget management compared to overtime work by in-house employees, which can drastically affect the cost. Outsourcing also reduces the cost of equipment, software, office space, and office supplies.
2. Easy access to experts
Outsourcing gives us easy access to working with experts in every department. It can get expensive to hire or attract the industry’s top talent. But working with an experienced and expert outsourced partner gives you the same benefit. It allows you to have quality content on a budget.
3. Frees you to focus on your highest value tasks
Outsourcing can help you and your employees to focus on your highest-value tasks by freeing you from all non-core activities. It allows you to give more time to your business’s core values and propositions. If you have limited resources, the best way to make the most of them is by outsourcing all the non-core functions. It can be data entry, email inbox management, content writing, social media management, etc.
4. Reduced risk of fraud
There’s a lower risk of fraud with reputable outsourcing as it shields your business and companies from monetary losses and reputational damage, both internal and external.Business owners can gain critical financial advice from outsourced parties helping them avoid typical business pitfalls and also training them to avoid fraudulent activities. It also shifts the burden of fraud prevention to the outsourcing party. But it is essential to be careful while hiring the outsourcing party to keep your business in safe hands.One must check the authenticity and should be well aware of all the terms and conditions of the company.
One of the best benefits of outsourcing is that it allows you to expand your business. It helps you to extend your business activities up and down as needed. Scalabilit doesn’t require you to have layoffs or hire new employees for any new venture. It becomes beneficial in times like covid -19 with high inflation rates.
Most business owners don’t need full-time bookkeepers, accountants, marketers, and legal teams. Outsourcing makes sure that you only pay for the work that is required. While choosing to outsource, it is advisable to look for customizable services so that you can pay for what is needed and add on services as the business grows.
7. Optimised back office
Administrative, accounting and payroll tasks can be difficult and expensive to maintain in-house, making it extremely difficult to keep secure and efficient back-office processes. It consumes substantial time and resources. Outsourcing these tasks becomes highly beneficial to business owners. The first thing a business can outsource during inflation is the admin work. It will not only cut expenses but also guarantees an efficient and secure job.
8. Virtual Assistant for specialised tasks
Virtual assistant refers to remote employees who are experts in their field and provide part-time services according to your needs. They can help you with email management, social media management, administrative work, research assistance, project management, and many more. Virtual assistants work remotely and on demand, which means you just need to pay hourly or on a monthly basis based on your requirements. Hiring a virtual assistant further allows you to cut costs and beat inflation.
During high inflation, the sudden change in market behaviour can be challenging to keep up with. Outsourcing becomes an excellent source for companies and businesses to control costs and work efficiently without compromise. But regardless of inflation or any other ordeal, outsourcing is a genius way for companies and business owners to make the best of their resources.