How can this be?
Doesn't G2 have to pay its employees?
Why are your costs so much lower than ours?
Are you using mostly student labor?
These are all good questions, and yes, we do pay our employees. No, our direct costs are not lower than yours. In all honesty, our direct costs are likely to be higher than yours. Yes, we utilize student labor, but only for seasonal/summer labor, or for paid internships. But ... there are many ways to perceive value in contract research.
Please realize that G2 works simultaneously for multiple clients. This means that our fixed costs are split among those multiple clients (as well as for our proprietary projects), and as a result, the fractional cost applied to any given client is much lower than if that cost needed to be carried by a single client. That is the real comparison you need to make when you consider your internal fixed costs.
In addition, the staff of a small CR organization like G2 tends to be more task-focused than your internal staff. This is a simple function of organization size: the larger the organization, the more likely servicing the organization is to distract your research staff from focusing on their routine --- but primary --- responsibilities. In a small organization like G2, we have the luxury of being able to focus on our work with few distractions. G2 has dedicated staff to serve you. G2 has dedicated facilities and infrastructure to serve you. If you are one of our CR clients, our work is your work.
What does CR cost? Considerably less than the comparable internal R&D cost. I can state that unequivocably, based on more than 20 years of experience in providing CR as a service to multiple industries.
However ...
There is a catch in that statement. Comparing internal costs to external costs (or CR prices) can easily become a comparison of apples-to-oranges. CR costs at any contract shop are lower than your internal costs only when you compare fully-loaded costs. Direct and indirect, including an appropriate share of organizational overhead.
What does this really mean? It means that outsourcing makes good financial sense during those periods when you are staff-limited (when planned workload exceeds internal resources) and unwilling or unable to hire the appropriate internal talent. Outsourcing makes good financial sense when you are facility-capacity-limited (when planned workload requires more greenhouse or field space than is available). And it makes good financial sense when your internal expertise is lacking, or on a learning curve because of an unexpected turnover in staffing.
And if outsourcing makes good financial sense during those crisis periods, when one of your critical resources is limited, does it not also make good business sense to establish a strong working relationshop with a CR shop like G2 before the need actually arises?
We think so, too.
