With the continuous rise of startup costs, remote staffing can be a great tool for saving money.
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According to Tom Tunguz, costs to run a business have almost doubled. It’s surprising, considering 2014 seemed like a great time to start a business. A big chunk of the $32.97 billion raised in 2014 went to funding startups. Venture capital fundraising skyrocketed by 62%, at its highest in more than a decade.
So what makes running a business today financially challenging?
The amount saved from cloud computing and other cost-reducing technologies now go into bailing yourself out of other expenses. Tom presents data that shows for the last five years, we’ve been spending more money on:
- Real estate or anything that has to do with property, including office spaces and equipment
- Payroll, and all expenses attached to it, such as salary, taxes, benefits, and stock options
- Operating expenses due to combined inflation of real estate and wages
According to Tom, as more startups are born, there’s an even greater demand for top talent. But with wage inflation looking more evident, startup costs are expected to go even higher. So to save on labor-related expenses without sacrificing the quality of your talent, strategic hiring is crucial.
Remote staffing is a good strategic hiring model. A lot of online articles focus on the benefits of remote staffing for the remote worker. But remote staffing also makes plenty of sense for companies, because it helps cut startup costs. Here are three ways to save with remote staffing:
Save on real estate
Hiring remote talent helps save on infrastructure-related expenses, whether your remote employee is at home or in a remote co-working space. According to a study sponsored by PGi, switching to an offsite workforce can save you up to $10,000 in annual real estate costs per employee. It’s serious money, especially if you expand those savings to a 10-person team.
Access more affordable talent markets
Location is no longer a deal breaking factor for assembling your team. One of the perks of hiring non-local talent is your access to less expensive job markets. As Patrick, one of our co-founders, puts it, “nowadays, saving money through labor arbitrage is almost a given. You can hire great people who are equal or better than anyone in your home country at a fraction of the cost, simply by breaking down the barriers of geography.”
Incur lower operating expenses
Tom says that combined inflation of real estate and payroll can dramatically impact your total operating expenses. That means your operating expenses can decrease, if you lower the growth rate for real estate and payroll.
With a remote setup, your total cost per employee can go down significantly from reducing both property and salary expenses. So your cost per employee will rise more gradually than it would with local staff. Security like this lets you grow with less risk.
What are other ways you think a remote setup can help businesses save money? Share them with us! We’d be glad to hear your ideas.
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