Should City Governments and other Businesses look to Virtual Services to Save Money?

It’s a rare occurrence when reading an article about a city budget makes me sad, but it happened just a few moments ago.  The article discussed how the City of Hickory, NC proposed offering early retirement to 84 of their employees. Reading the details of what would be offered in exchange for taking the early retirement deal didn’t really strike me as a wonderful option for those 84 people., especially in the current economy.  But that wasn’t what made me sad, it was the following quote:

Wood admitted that Hickory would lose a lot of experience if the eligible employees opt to retire and that their younger replacements would make less money. But, he said, the city could use the payroll savings.

How tragic is it that the City of Hickory is willing to sell out their experienced workers, workers who probably have created relationships with the people they serve, in exchange for saving money.  And that made me wonder, “Could some of those people provide the same high quality, experienced services virtually and still save the city money?”  It’s a hard one to call not knowing just what positions these workers are in.  Some positions do require in office personnel, but it’s possible that some don’t.

So how would a city government or any other type of business determine how they could adopt virtual services to save money? 

There are two options to consider.  The first is to keep the worker as an employee but turn the position into a telecommuting position.  The second is to offer that worker the option of starting their own business as a virtual professional, allowing them to not only provide needed services to them but also to other businesses that may benefit from their expertise.  There are money saving pros to both.

If your employee or employees are sitting at their computers all day, making and taking phone calls, working on documents, data input and other tasks that are computer based with little to no public interaction in person they are a good candidate for either choice.  Once this has been determined it comes down to deciding which option works best for the situation. And don’t use filing as an excuse to ‘need’ an in-office worker,  if you haven’t moved to an electronic files system it’s high time you did. Even the medical field, infamous for paperwork, is transitioning  to electronic files.

Converting an in-office worker to a telecommuting employee saves money by reducing overhead costs.   Maybe you don’t need that huge office space, running lights, computers, air conditioning/heating all day.  You’ll also save money on lost time due to sick children or bad weather.  Many in-office employees are even willing to take a small reduction in pay due to the fact that they are saving money on transportation, work attire and other related expenses.  In fact many view the benefit of being able to work from home as worth a small pay cut.

The second option is more extreme, but can save a business even more.  Offering the employee the option to strike off on their own as a virtual professional  and then sub-contracting them to do the same tasks they are currently providing as an employee.  This option will require the current employee to open their own service based business, but it is generally a very low cost start-up and you could offer to help them get started.  Most employees are going to have the equipment needed at home already, a computer, an internet connection and a phone.  You will need to be prepared to pay a higher hourly rate, but remember, you won’t be paying taxes, insurance  or benefits because they will no longer be an employee.  In fact you can go here to see just how much it can save you. You will also need to be a hands-off type of person, meaning that you won’t be able to dictate the exact details of how the work gets done.  But should that really matter as long as the work is done and done well? After all, you don’t tell your attorney how to draft your legal documents right?  And since this person has already worked for you, they certainly already know how to do the job well.  Make sure you have this last bit under control as the IRS frowns on you treating someone the way you would an employee but getting the benefits of a sub-contractor.  The important thing here is that  this former worker now works independently of you.   Plus, they also will have the right and the opportunity to offer their expertise and services to other businesses the same way your attorney or accountant does.

If the situation is right, either option saves you money but allows you to keep your experienced help and not risk some of the nightmares of hiring new, inexperienced workers.  Perhaps more businesses and city governments should consider the new opportunities that technology makes possible before ‘offering’ early retirement options.  That would make me, and possibly those 84 workers, happy.

[stextbox id=”info”]Did this article make you curious about how your business might benefit from converting all or some of your current workforce to virtual service providers?  Questions about the technical aspects of establishing workers in the ‘cloud’?  Feel free to contact me!  Are you a current employee interested in learning more about working virtually?  Contact me or check out Virtual Assistant Survival School for instruction on how to start your own business.[/stextbox]


Tina Marie Hilton provides online technology services to forward thinking businesses. She writes on her Tips from T.Marie business blog to share insight and information with other small businesses and entrepreneurs. It also makes her feel like that certificate in creative writing isn't going to waste completely.