A Glut of Hiring Alternatives
Instead of bringing on full-time talent, small employers are increasingly using temporary workers based in the U.S. and overseas
Private-sector job creation has been weak in recent months, as few companies seem comfortable taking on the risk of new hires. But anemic job reports may also be attributable, at least in part, to hiring alternatives that are becoming increasingly attractive to small businesses.
New technology is allowing entrepreneurs to connect with and pay for specialized labor that does not add to the full-time company roster—or incur payroll taxes and worker’s comp costs. Between interns, temporary employees, freelance contractors, and overseas outsourcing shops, small businesses can get much of what they need done without hiring a single full-time employee.
That’s been the case for Adam Carroll, who, with his wife, Jennifer, founded National Financial Educators, a seminar company in Iowa that teaches personal finance to college students. The $500,000 business relies on four professional speakers who work as independent contractors, occasional help on projects from professionals based abroad, and interns.
A Problem With Millennials
At one time, Carroll says, he had a sales staff of seven 20-somethings, but he found their work ethic lacking. “I felt like I wasn’t doing the business; I was babysitting the employees,” he says. Increasing commissions didn’t help. “Millennials have a very different view of work. Money doesn’t drive them, because they perceive that they don’t need it,” Carroll says. In contrast, he’s found an extra $50 goes a long way to motivate contractors based in India or the Philippines.
Naja Hayward, who founded Naja Tea in Long Beach, Calif., after losing her job at a nonprofit in January 2008, has had similar experiences. She estimates that she has saved several thousand dollars using interns and independent contractors at her company, which wholesales packaged, loose-leaf teas to retailers and provides tea service for restaurants, cafes, and bars. The business now has $250,000 in annual revenue and two full-time employees.
Hayward outsources special projects, such as overhauling her website, to international contractors in such countries as Bolivia, India, Pakistan, and Germany. She finds them through oDesk, a company that brokers work mostly between U.S. companies and 700,000 contractors and freelancers around the world.
“I look for strong experience in choosing candidates and good communication skills,” Hayward says. Language problems can be a barrier, she says: “When a person is difficult to communicate with, a project can go on longer and cost more than it should.”
The Value of Direct Conversation
She recommends speaking directly with potential contractors via Skype or gTalk. “I have seen e-mails that look like you or I could’ve written them, but when I interview them they can barely speak English,” Hayward says. “If they are asking me a lot of questions and after a certain amount of time they don’t seem to be getting it, I move on to someone else.”
Benjamin Munoz, an Austin-based entrepreneur, has used several international outsourcers whose lower costs have benefitted both his two startup companies and his nonprofit website. “If we had to pay for U.S. or Western talent, it would be pretty difficult to do what we’re doing,” he says.
Recently he created a 90-second video for his nonprofit site—a networking organization for people with rare diseases—that cost him a little over $300 working with an artist and a musician in the Philippines. That’s about one-tenth of what he expected to pay using domestic talent.
Unorthodox Vetting
Munoz has a nontraditional vetting method for overseas contractors that he says works well. He starts by advertising very small projects, then hires the two or three best prospects. Based on how they perform, he may use them again for slightly larger projects.
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