There are now fears the world is on the brink of a recession after new horror data from the United States sent chills around the world. But the pain is set to deepen for Western economies after the United States recorded the highest rate of inflation since 1981 – stoking fears that the global economy is slowly sliding into a recession.
The war in Ukraine did not help. Venture capital is drying up, capital markets are tightening and conditions look grim.
As an entrepreneur, it’s hard to run a business let alone under conditions that don’t bode well for businesses operating on low margins or, even worse, losing money.
As an entrepreneur, how do you survive the next few years?
In the words of Tim Ferris, author of 4 Hour Working Week: “earn dollars, compensate in pesos.“You want to get the most out of every second and every penny of your day.
The extensive experience of remote work has brought outsourcing to light as a cost-cutting technique. Companies around the world have allowed workers to move into their homes, and the initial results have been surprising.
There was a growing trend towards remote work arrangements even before COVID-19 made it an inescapable reality. Today, entrepreneurs and managers are looking abroad, as the rules of remote working have been tested. The prospect of cutting costs by hiring staff from jurisdictions like the Philippines where labor costs are low and education rates high has become more attractive.
Winston Ong, CEO of BruntWork recommends starting with a Filipino virtual assistant then browsing your staff list to see which roles can be sent overseas. Cultural integration is a critical factor to consider. There are many cultural barriers to overcome, but Filipino virtual assistants are used to working for western clients.
Virtual assistants in the Philippines have the most Western-influenced culture in Asia. Their educational system is similar to that of the United States and English is their second language as well as the language of business and government.
Strategies for businesses to avoid rising costs
Outsourcing is the fastest way to reduce opex in a recessionary environment. “Entrepreneurs have shifted to the outsourcing paradigm and they are increasingly considering moving overseas as they continue to struggle with local hiring. In the current environment, workers seem to be changing jobs and demanding more pay at an alarming rate, and who could blame them.“said Winston Ong, CEO of BruntWork.
Outsourcing alone will not avoid recession. The World Bank hopes supply chain operations and production around the world will soon return to normal levels, but perhaps the genie is already out of the bottle.
Benefits of outsourcing
Now that working from home has become normal, companies can create policies and procedures to make it look like an office setup. Ong says “ I really think it’s going to be difficult for employers to accept giving choice, that all of this will eventually become the new norm with more rigid work arrangements that just seem different than they used to be. Outsourcing will be a key part of any organization’s plans to stay efficient and flexible as the economy begins to crash.”
Whether or not the World Bank’s prediction comes true, thoughts of recession will force management to consider outsourcing as a way to prepare for an uncertain future.
Author: Jennyfer Ann Valence