| The Employeeless Firm (tm) |
The most effective selling point for getting support functions outsourced to your Support LLC (tm) is NOT that you are cheaper. The fact that your Support LLC may have a lower hourly bill rate than the hourly bill rate that the company sees (associated with having its own employees do the work) is NOT likely to persuade a company to outsource a function. This is true because at a large number of companies (particularly law firms) the bill for work that employees do on projects is billed to and paid for by the company's CLIENTs.
What companies large as small DO care about are the liabilities associated with having employees that cannot be billed to their clients. The bottom line is that having employees mean exposure to liabilities, exposure to discrimination lawsuits, wrongful discharge suits, workplace accident suits, employee related taxes, employee related healthcare costs, etc.
And while the day to day work of some employees may simply be charged to the client of whatever project the employees are working on, a damage award for sex harrasment cannot be charged to any client.
Companies also care about illegalities and public relations problems associated with having employees. When one well know investment bank became the focus of an insider trading scandal, the FIRST thing the bank pointed out in its press releases was that the PERSONS involved in the act were TEMPs and not employees of the company.
With respect to law firms, employee related damage awards and other employee related expenses come DIRECTLY out of the pockets of the partners, this is the difference between a partnership (or partnership derivative like LLC/LLP) and a corporation. This fact may explain why law firms seem to be Number 1 on the hit list of most of the outsourcers.
