Close button
How much money could your business be saving?
Create your Fundera account to find out.
Continue

The Pros and Cons of Hiring Virtual Outsourced Labor

Eric Goldschein

Eric Goldschein

Eric Goldschein is a staff writer at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, the Huffington Post and more.
Eric Goldschein

Small business owners are often presented with a simple problem: It’s not possible to do everything by yourself, but the cost of hiring someone can put your company in the red.

You want to pay your employees an honest salary—and you must, by law—but maybe you simply can’t afford it.

What do you do?

Using an Alternative Labor Force

In an age where virtual communication and collaboration are easier than ever, some entrepreneurs are sidestepping this question altogether by outsourcing their labor to people who live in other countries and aren’t subject to the U.S. minimum wage.

Using websites like Fivver, Upwork and Elance, small business owners can enlist people who agree to work for a fraction of what it would cost to hire someone locally. In return, they’re seeing little dropoff in productivity—and even seeing savings they can pass on to customers and clients.

It’s a debated practice, but not an uncommon one: an estimated 2,382,000 U.S. jobs were outsourced in 2015. The vast majority of these jobs were in IT, accounting, and auditing, though jobs in fields like law and chemistry were also outsourced.

A growing trend in outsourcing is to find “virtual assistants”—the number of postings advertising for these positions has skyrocketed in recent years.

VAs, as they’re called, perform the more menial, mundane tasks like sending personalized emails, creating citations, and researching contact information. These duties tend to bog down full-time salaried workers, decreasing their satisfaction as well as their productivity—and costing clients more over time.

In our current political and economic climate, this can be a controversial tactic. But while Celestina Pugliese, founder of Ready Check Glo, understands the “un-American” aspect of it, she also feels like she doesn’t have much of a choice.

“I tell people: having employees is a luxury,” she says. “So much of your money goes towards paying a staff, and I simply can’t afford to pay someone $15-20 an hour at this point.”

Getting Started with Virtual Assistants

Pugliese created Ready Check Glo in 2010, providing restaurants and other venues with an illuminated check presenter that helps ease the payment process.

After using inexpensive online resources to help get up and running—like legal work and website development—Pugliese decided to do the same for day-to-day operations.

“I realized recently that I need help—I can’t be the orchestra and the conductor anymore. I have too many leads to handle,” she says. “At first I found some amazing sales people and offered them 40% equity of the company, but then I thought, I can’t give up so much of my company after having it this long. That’s when I went on Upwork to find personal virtual assistants.”

Pugliese placed an ad on Upwork and included important requirements, like impeccable English speaking and writing skills, as well as a camera so Pugliese could see them and get in touch at a moment’s notice. After making sure that her candidates were well-reviewed, she selected two men—one from Sri Lanka and another from Kenya.

“They’ve been a great investment,” Pugliese says of her new employees. “At $3.50 an hour, they take 80% of the work off my plate that I couldn’t do in a week. To pay $100, $120, $140 a week for basically a 40-hour work week, that’s incredible. And they’re fantastic—their English is impeccable; everything I tell them to do, they do it; they have their own ideas; they’re educated men. Plus, they don’t require insurance, and I never have to worry about them being late for work.”

Pugliese enlists her assistants to write personalized emails—instead of sending out an ineffective email blast to all her clients—as well as making appointments and researching contact information. She calls these tasks “time-consuming and meticulous,” and not having to do them herself frees her up to focus on landing bigger clients and servicing accounts.

Trying to strike that same balance of tedious tasks with high-level operations is what drove Vlad Rascanu—founder of 80 Proof Digital, a digital marketing company based out of Toronto, Canada—to enlist the help of virtual assistants as well.

“I noticed that a lot of my employees didn’t enjoy doing the redundant tasks—the mundane day-to-day tasks, creating links and citations—that necessary work for our industry,” says Rascanu. “So I decided to outsource those specific tasks at first. I noticed it reduced the amount of time it took for our in-house specialists to do their work, letting me place more clients per specialist. The employees were also happier to not have to do those tasks.”

What began as an experiment became a full-fledged alteration of the business model for 80 Proof.

“Instead of just outsourcing specific tasks, I can hire full-time virtual assistants to help my employees with any task. Now I can support 5 to 6 clients per specialist instead of 2 or 3. Instead of hiring an additional SEO specialist in-house, I’m now hiring the VAs at half the cost here, and those savings are passed on to the clients in the form of reduced retainers,” Rascanu says.

80 Proof uses Upwork as well as OnlineJobs.ph, noting that his virtual assistants from the Philippines are hard workers and speak excellent English.

More Value for Less Investment

Rascanu says that he’s upfront with his clients about using outsourced help and that the system works for everybody.

“The clients are aware, and they’re happy because they’re getting more work out of us at a lower price,” he says. “And, at the same time, they’re getting good service. They still have a dedicated in-house specialist that takes care of the strategy and proper customer service. Everyone is happy essentially, including my employees, because they can focus on the things they enjoy doing, like strategy and high-level tactics.”

When asked how he would handle questions from Canadians regarding his practices—couldn’t he hire locals to perform these tasks?—Rascanu says he’d like to hire people in Toronto but that it’s not a sustainable practice.

“I can guarantee you that no one will stay doing those tasks long-term,” he says. “I’ve been training dozens of employees over the years and I guarantee no one would want to stay. They’d come in, learn what they need to do, and because I can’t offer a very high salary for those tasks, they’d leave to go somewhere else. Then I’m left to having retrain everyone every couple of months. It’s not gonna work—for them or for me.”

Pugliese appears to be working towards a similar model: she’s so happy with her Upwork employees that she plans on hiring two new ones in the coming months, and she thinks that they can help form the backbone of her company.

“I do want to hire Americans, absolutely, and then still keep the Upwork people on and hire more,” she says. “The Upwork employees will be part of the team—their assistants—so the local people can focus on sales.”

Some Potential Drawbacks

Outsourcing virtual labor isn’t a perfect system, of course. Rascanu identified a couple of issues that he needs to work around.

“The biggest is the time difference and being able to call someone to get something done at certain hours,” he says. “Sometimes we can’t get something from the VAs because they’re sleeping.”

“Also, I can’t keep a good pulse on everything they’re doing day-to-day. It’s hard to tell if they’re working 8 hours or if they’re working 5 hours and saying those tasks took longer. I could use time-tracking software and track their browsing history, but they’re always going to find a way to alter those numbers if they want to. So, at the end of the day, I just have to trust them. And sometimes you trust them and they’re honest and do the work, and sometimes people will try to cheat, and at that point you have to look for someone else.”

Pugliese’s one main issue with her virtual assistants has nothing to do with time, but rather with perception.

“Once they make the appointment, I have to make the calls myself,” she says. “Nothing against them, but because of their accent they might have an issue calling clients. They’ll often ask me, they want to make a phone call, but the clients might hear a Kenyan accent or Sri Lanka accent and that might make them think we’re based out of another country. I have to be hands-on with the calls being made.”

“I do have another part-time employee who’s been working for me for four years—she gets $14 an hour. I almost don’t want to use her anymore because I find these guys are a better value, but she’s been loyal to me, and I need someone else to make calls with an American accent, too.”

***

You can argue the ethics of using cheap foreign labor to complete these tasks, but the efficiency is hard to dismiss.

In an increasingly interconnected and globalized economy, it’s easier and more cost-effective than ever to add virtual assistants to your workforce. And if clients and customers also reap benefits in the form of cheaper services and more dedicated specialists and sales people, it’s difficult to imagine this trend losing momentum.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Eric Goldschein

Eric Goldschein

Eric Goldschein is a staff writer at Fundera. He covers entrepreneurship, small business trends, finance, and marketing. He was previously the managing editor of SportsGrid.com, and has written for Business Insider, the Huffington Post and more.
Eric Goldschein

Our Picks