“Verbal Outsourcing” Is the Most Expensive Kind—The Less You Hire, the More You Need a “Single Sheet” Before Partnering

In November 2024, the “Act on Improvement of Transactions between Freelancers and Business Operators,” commonly known as the Freelance New Law, was enacted to establish rules for companies dealing with freelancers (individuals who do not belong to a specific company and work under contract for each job). It has been over a year and a half since then. Even so, in a survey conducted by the Japan Fair Trade Commission and the Ministry of Health, Labour and Welfare before the law was enacted, 17.4% of those commissioning work and 44.6% of freelancers responded that they had experienced cases where “transaction terms were not clearly stated.” Verbal outsourcing, based on a casual “just take care of this for me,” still remains common.

“Management without hiring” is quietly spreading

Recently, the number of companies running their business without hiring employees has truly increased. I myself run a one-person company with no employees, and many of the people I meet in business negotiations are sole proprietors or small companies that operate by partnering with external people for each task.

Looking at the data, this trend is clear.

• In 2024, the freelance population in Japan reached 13.03 million, with an economic scale of 20.32 trillion yen (Source: Lancers “Freelance Survey 2024”)

• The adoption rate of BPO (outsourcing tasks such as accounting and general affairs to external companies) among small and medium-sized enterprises is 12.9% (Source: Persol Business Process Design “Survey on the Introduction of BPO and Business Outsourcing in Small and Medium-sized Enterprises,” 2025)

The advantage of management without hiring is that you don't have to carry fixed costs. You can partner with the necessary people when needed, according to the volume of work. In an era of labor shortages, I think this is a very rational form of operation.

However, there is a pitfall here. As the number of partners increases, it becomes easy for “who is doing what and to what extent” to become ambiguous.

Moreover, the parties you outsource to are not just BPO companies. People who build websites, people who handle accounting, people who manage social media—many of them are individuals or very small companies. Since the other party is not a large organization, you often “decide through message exchanges” rather than signing a formal contract. While ease is a major appeal, that ease easily leads to ambiguity.

With a hired employee, you can meet face-to-face every day to reconfirm the scope of work. But with external people, the initial agreement is almost everything. If that is just a verbal promise, it will fall apart later.

The law has drawn a “minimum line”

The Freelance New Law is a law that specifically addresses these “verbal promises.”

The most important point is that it has become mandatory to state transaction terms when outsourcing using “written documents or methods that leave a record, such as emails or SNS messages.” Simply conveying them verbally is no longer acceptable. The items that must be stated are determined, and the main ones are as follows:

• Details of the commissioned work

• Amount of remuneration

• Payment due date for remuneration

• Date of contract, etc.

Furthermore, what is often overlooked is that this obligation also extends to “business operators who do not hire employees.” In other words, even if you are a freelancer working alone, if you ask another freelancer to do something, you have an obligation to put the terms in a tangible form and provide them.

And this is not just a “best-effort target.” If the law is violated, the Japan Fair Trade Commission and others will provide advice, guidance, and recommendations; if they still do not comply, orders will be issued, and if those orders are also violated, fines of up to 500,000 yen are stipulated (Source: Japan Fair Trade Commission/Ministry of Health, Labour and Welfare “Overview of the Act on Improvement of Transactions between Freelancers and Business Operators”).

However, I would like to pause here and think for a moment. If you put the items stipulated by law into a document, can you really be at ease?

Disputes usually arise when the “scope” is ambiguous.

I believe that the law is merely the “bare minimum.”

In reality, disputes over outsourcing occur not so much because the compensation or payment date wasn't written down, but because the “scope of work” was ambiguous. You might intend to ask for a “website build,” but the other party thinks it’s one page, while you think it’s five. You might ask for “accounting help,” and they do the data entry, but the monthly closing isn't included. These kinds of “he said, she said” misunderstandings cannot be prevented even if there is a written contract.

To be honest, I have also had times when I partnered with someone and just settled things verbally, saying, “Something like this, roughly.” That led to misaligned expectations, creating unnecessary rework for both them and me. I am reflecting on that.

So, what should you do? What I recommend is to write down your company’s tasks on a “single sheet” before asking anyone for help.

• What processes is the work divided into?

• Who will perform each process (in-house or outsourced)?

• Where does the outsourced scope end, and where does the company’s responsibility begin?

• If that process stops, who will be in trouble?

If you organize this beforehand, the conditions for outsourcing will become surprisingly clear. The items required by law will also naturally be filled in. The order is reversed, isn't it? It’s not about making the document first; it’s about dividing the work first.

There is one more important effect of writing it out. When you line up the processes, you can see the line between “this work can be outsourced, but this should remain in-house.” If you outsource processes that are core to your company’s strengths without thinking, you might get it done cheaper and faster, but you will lose something precious to your company. What to hand over and what not to hand over—only a manager who has divided and viewed the work can decide that.

The less you hire, the more you need that first “single sheet of paper.”

Running a business by partnering with outsiders without hiring employees. This will become an increasingly common option for small and medium-sized enterprises in the future. That is precisely why the quality of how you partner will directly determine the quality of your management.

The Freelance Protection Act is a law that supports that first step. However, I believe that what truly prevents accidents is not the document required by law itself, but the humble task of “dividing your company’s work and making it visible” that comes before it.

Before partnering with someone new, try writing down your own work first. Can you explain the scope of the “work you are currently outsourcing” on a single sheet of paper? If you can’t explain it immediately, that is where your next step begins.

Read more

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I am writing about “accounting,” a prime example of work that can be outsourced.
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▶〈Warifull〉 Streamlining labor shortages in the construction industry through “task decomposition”

Before increasing staff, first divide the work. In a 60-minute free consultation, you can take home your company’s “Draft Task Decomposition Sheet (1 sheet)” (Consultation and consulting fees are 0 yen).