Outsourcing to overcome the downturn

AN emerging group of businesses offering everything from virtual offices to outsourced human resource divisions has benefited from the economic downturn as companies seek to cut costs.

By specialising in one area, the outsourced model tends to offer a service to small and medium-size businesses that costs substantially less than maintaining an internal division.

Alan Corkill, general manager of Eyeson Business Solutions, said his business helped smaller companies compete against bigger rivals by taking care of their human resources needs such as recruitment, unfair dismissal, workers' compensation and payroll duties.

"Nine times out of 10 those things will bury a business before it gets started," Mr Corkill said.

The outsourcing specialist industry now goes well beyond the virtual offices - a managed telephone answering or email response service that makes a company appear bigger than it actually is - which started to gain traction in the 1980s.

John Abbott, the director of My HeadQuarters (MyHQ), said his Perth-based business was as much about networking as offering a location for companies to expand into Western Australia without committing to a long-term lease.

"Having a great place for people to interact is very important for us," Mr Abbott said, concerning the business's serviced offices.

People pay membership fees to MyHQ to tap into its business network and use its facilities.

MyHQ director Rasmus Nielsen said the network helped business people gain access to important contacts without ''spending lots of time reducing golf handicaps''.

The virtual office industry has developed into a competitive area that competes for all sorts of businesses.

One recruitment firm that employs Queensland-based Small Business Evolution (SBE) uses the company to take its calls and transfer inquiries to the relevant recruiter; all who work from home.

Despite being located in Queensland, clients contacting companies through SBE would believe they have called the front desk of the desired company, in whatever state it is the company operates in.

SBE managing director Michelle Carr said small businesses were opting to close their offices and set up virtual offices as the economic downturn gathered pace.

Along with operating a virtual office, SBE can take on a company's bookkeeping, payroll, marketing and IT needs to reduce head counts.

Ms Carr said SBE, which specialises in outsourced administration, had enjoyed a significant increase in business during the past year.

"It's just like having your administration on a different floor," Ms Carr said.

The basic premise of all outsourcing companies is that it is cheaper to have one company taking phone calls, or doing paperwork, or recruiting for several firms, than employing someone at every company.

The leased-office sector has developed into a competitive area that includes international heavyweights such as Servcorp and local providers Amberley Business Centre.

One of their selling points is that tenants only pay for the facilities they use, which may include an hourly rate for the use of a boardroom or a fee to have the centre's receptionist take telephone calls.

Amberley manager Karen Baldwin said the Hay Street complex had tenants ranging from big companies conducting a specific project in Perth to start-ups trying to reduce their set-up costs.

"Clients don't pay for empty space; they only pay for what they use," Ms Baldwin said.