Fractional Employee: outsourcing work

The Fractional Employee

Daly’s arrangement is one that’s becoming more popular as companies cut back but can’t afford to give up completely on expertise they need. The concept isn’t entirely new, says Daly. He cites the example of bookkeepers whose jobs involve working with a number of companies. It’s similar to the jobs performed by Glenview, Ill., based SurePayroll. “We allow companies to outsource burdensome payroll tasks,” says Michael Alter, company president.

Companies may opt for outsourcing work they need to companies like Alter’s or hire fractional employees, as Daly recently did. Either way, a savvy worker with skills employers need will take advantage of the outsourcing trend. Alter says more companies today are relying on independent contractors to reduce overhead costs; they can use the contractor only when the need arises.

Alter cautions that workers seeking these types of arrangements and the companies they work for should keep in mind some important distinctions. “A fractional employee is not necessarily the same as an independent contractor,” he says. The IRS has strict rules concerning pay, payroll taxes, benefits and supervision of contractors. If you choose that route, you’re on your own for taxes and health care, but you have additional flexibility. A fractional employee is on the company payroll. In the fractional arrangement, you need to keep employers informed of your commitment to one another. You might job share with someone else at a company or you might work for several different employers.

outsourcing work Outlook

“The employment world is going ‘free agent’ from an employee’s perspective,” says Daly. “Employers are always looking for ways to do more with less.” Any industry that has peaks and valleys in business would find outsourcing work to independent contractors ideal. Fractional employment arrangements work great for many employers, too. For example, each small nonprofit association in your community may need a graphic designer or information technology support but doesn’t have the workload or budget to support a person with those skills on a full-time basis.

Getting Started

First, identify the companies in your area that might benefit from a fractional employee arrangement or from outsourcing work. They probably need the service you can offer on a regular basis. Then try approaching several local nonprofits or companies with the idea of sharing your talents. And here’s another layer: if you’re not ready to strike out on your own, look for small firms that offer outsourcing services like Alter’s.

“Since the outsourcing work is on the rise, it may be a good place for people to look right now,” he says. Firms that offer outsourcing work for other companies are prone to hire independent contractors or offer job sharing, in part because they have peaks and valleys in their work load based on how many folks use their outsourcing services,” he says.

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