Small Business Hiring and Outsourcing Trends in 2014
All
eyes
are
on
small
businesses.
According
to
a
recent
report
in
BloombergBusinessweek, small businesses are likely to add more jobs this year than they did in 2013. A New York Times article talks about how small businesses are also joining the outsourcing bandwagon this year. These trends indicate the increasingly important role that small businesses are playing in the economic scene.
What is a Small Business?
The Bureau of Labor Statistics (BLS) reported that the
U.S. economy added 113,000
payroll jobs in January. That brings us to the question of what exactly is ‘small’? How is a small business defined? The Small Business Administration (SBA) recently redefined the concept and announced an increase in the size standards for 70 industries, for instance, cotton ginning from $7 million to $10 million in annual revenue; commercial banking from $175 million to $500 million in total assets; and racetracks from $7 million to $35.5 million in annual revenue. According to the SBA’s
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new standards, about 17,000 more U.S. businesses are now under the small category. This will allow them to benefit from government loan guarantees and qualify for government contracts. It therefore comes as no wonder that they are hiring.
Positive Trends in Hiring and Employment
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According to a National Federation of Independent Business (NFIB) survey, each NFIB owner increased employment by an average of 0.11 workers in February (seasonally adjusted), which was the same as January.
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Small businesses added 75,000 jobs in January, according to payroll processing firm ADP.
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Though the CBIZ (CBIZ) Small Business Employment Index, which measures hiring at companies with fewer than 300 workers fell last month, the overall picture is positive.
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Sure Payroll (PAYX) reported that 80% of the small business owners expects profit in 2014, barring a major economic downturn.
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The unemployment rate for unincorporated self-employed workers and unpaid family workers was 5.2 percent last month, down from 5.8 percent in January 2013, according to the BLS.
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Small Businesses adopt Outsourcing As mentioned earlier, recent reports indicate that small businesses, like big organizations, are also turning to business process outsourcing. The National Bureau of Economic Research says that with the rise of online job market portals, small businesses are increasingly using offshore outsourcing services to reduce costs. It is the proliferation of online marketplaces such as oDesk, Elance, Freelancer and Guru that is making it possible for small businesses to easily hire efficient outsourcing services. Last year, CNN Money reported on an Elance survey covering 837 U.S. small businesses of which 78% said freelancers improve their competitive edge.
The main attractions that outsourcing offers small businesses are:
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Helps them get the job done without the hassles of government paperwork
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Provides access to talents that are not available locally
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Lower wages compared to local workers
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Easy to implement as input and output transactions can be done easily via internet
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Round-the-clock production
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Avoids rent and need for investment on in-house infrastructure
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Reduces the need to hire to meet the small project and short-term needs
Whether they are hiring or outsourcing, it is clear that small businesses are important to the U.S. economic revival. More than one-third of all U.S. exports by dollar value come from Small and medium-size businesses, says a recent report. Businesses that do their research well and take advantage of the many opportunities out there are the ones that will benefit.
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