.Roaring Mouse

The phrase “outsourcing” has been a much-maligned one here in the United States. This is primarily because people automatically associate the outsourcing efforts of corporations with the loss of jobs to companies abroad. However, when functions as diverse as customer service, software development and graphic design can be performed cheaper outside the company, it’s logical for any commercial enterprise, small or large to at least study a lower cost alternative. Given that, though, I submit that there’s a distinct difference between outsourcing in a small business environment vs. outsourcing in a large corporation. While a large company often has a choice whether to engage in outsourcing activities or not, given the fact that they’ve often already developed the expertise in question internally, outsourcing for small businesses is often a matter of survival or the only catalyst to growth. Having been intimately involved in two small businesses in my professional lifetime, I can easily vouch for the necessity of outsourcing and how it can propel a small business forward. My goal in this post is to focus solely on how to approach outsourcing (whether farmed out to a domestic company or abroad) so that you give yourself the greatest chance of achieving success with the effort.

• WHAT SHOULD I OUTSOURCE? – “Stick to what you know best and outsource the rest”
  • You work for yourself because you believe that there is one or a handful of things that you can do better than anyone else. Whether that’s baking bread, creating Drupal-driven websites or selling music to a discerning local community, you are good at what you do and should spend the majority of your time offering that unique ability to your customers. The likelihood that you have the expertise and bandwidth to perform all tasks related to growing your business is slim, so choose the two or three things that you believe you can do well and look for other people who can do the rest. Over time, you will develop a more intimate knowledge of the general management skills necessary to conduct a business successfully, but it’s tough to try to develop those abilities while you’re just starting out.
• WHO DO I OUTSOURCE TO? – “Check out the RAP – References, Accreditation and Portfolio”
  • Once you’ve overcome the hurdle of thinking that you can do everything related to a business well, the next step is to find the right people to help perform the tasks you’ve decided to outsource. Web-based businesses such as oDesk.com, guru.com and Elance.com are available to help you find contractors for a variety of different outsourcing functions. The rating system, previous client reviews and the ability to view the providers’ portfolios allow you to make a more informed choice about the provider that you end up choosing. On a local level, there’s the tried and trusted method of word-of-mouth referral. Try your local business contacts or your local Small Business Administration office for recommendations. For functions such as accounting and business law advice, be sure to ask for proof of certification and accreditation. One would think that this is a given, but I’ve heard terrible stories about people getting bad advice from self-proclaimed subject matter experts whose only claim to expertise is having worked in an accounting firm or lawyer’s office in the past! Here, the adage “You get what you pay for” rings true. While not every expensive service provider is worth the money they charge you, markets have a funny way of shaking out those who overcharge or undercharge for their services and for the most part, the value you derive from someone’s services is commensurate with the amount you pay them.
• HOW SHOULD I APPROACH OUTSOURCING? – “Outsourcing is akin to a Hollywood romance movie”
  • Now that you’ve decided who to work with, what’s the right way to approach an outsourcing relationship? A few important things spring to mind immediately. In the same way that modern day Hollywood romance movies prescribe a “get to know you slowly” approach to building a relationship, the most successful outsourcing relationships are formed upon the foundation of a few small, successful ventures. By choosing less critical tasks as your first outsourcing projects, you risk losing less if the relationship doesn’t work out and also have an opportunity to get a feel for how the relationship will develop. After choosing the projects you want to outsource, the next step is to set expectations. This is probably the most important step in the relationship-building process, as it completely outlines what both parties expect and deliver to each other. Important things to consider when setting expectations are milestones for the project, the costs associated with each milestone or checkpoint, the timeline that each milestone lines up with and the quality of the deliverable. While it’s not always easy to do this, a Hollywood style pre-nuptial agreement is no less applicable in the business world. If the relationship doesn’t quite work out for any reason whatsoever, it’s good to have something committed on paper that clearly states what each party is entitled to if the relationship is terminated before the project is complete. Even if the issues do not stem from trust and integrity, expectations and results are frequently misaligned as there are many tasks that do not always lend themselves well to written descriptions. It’s best to protect yourself in these instances.
• HOW SHOULD I TREAT MY OUTSOURCING SUPPLIER? – “Your supplier is a remote employee”
  • Anyone who’s managed an employee or been one knows that lack of communication can easily result in unmet expectations, even if there’s frequent daily interaction between employer/manager and employee. Working with an outsourcing supplier is very much like working with a remote employee. Opportunities for personal interaction are rare and the onus is on you to ensure that communication is frequent and accurate. After all, you’re the one who stands to lose the most if the relationship doesn’t work out. And of course, like any other employee, an outsourcing supplier expects two very basic things from you – your respect and on-time payment.

I have tried my best to capture the steps necessary to ensure a successful outsourcing experience. This list was born out of my own personal experiences, and is certainly not exhaustive. If you’ve had successful or painful outsourcing experiences, I’d appreciate it if you’d share the lessons you learned with us in the comments section.