Top things to consider before jumping into outsourcing

Top things to consider before jumping into outsourcing

Laura Lee Sparks, founder and CEO of Legal Marketing Maven, used her two decades of experience in managing successful firms to create her own virtual assistance company. She managed to grow her firm into a six-figure business in a matter of months.

One secret ingredient behind her success is her willingness to outsource some back-office tasks. Sparks points out that while most entrepreneurs have talents, they are hampered by their belief that they can do everything on their own. She herself believes that outsourcing some of the day-to-day tasks will free the business owner of precious time he could devote to generating income.

Many entrepreneurs see outsourcing as a business strategy reserved for big companies. Technology has, however, made it accessible even for small firms. As a matter of fact, outsourcing has a track record of making a huge impact on the bottom lines, productivity, and growth of many small businesses.

Will it have the same positive effects on your own business? What are the top things you should consider before jumping into outsourcing?

The timing

The right time to dive into outsourcing can vary for different companies. Some companies have in-house employees who can handle the day-to-day tasks but would require an extra set of hands for a new project. Sometimes, the extra load does not warrant a full-time employee.

In such cases, outsourcing may be the best course of action. Tonya Thomas, president of The Small Office Assistant, realized that it was time to get into outsourcing when she wanted her business to grow but did not have time to proactively make that growth happen.

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Sparks, on the other hand, advises businesses to outsource some business processes right from the start. She recommends starting out with a virtual assistant and a bookkeeper, and eventually grow the team. Sparks now has outsourcing contracts with a project manager, an executive assistant, a graphic designer, a ghostwriter, a web designer, and a virtual bookkeeper.

The timing
The timing

The business tasks to outsource

With more and more qualified professionals leaving their corporate jobs to work as freelancers, just about any business task can be outsourced these days. This does not mean you should take every chance you get.

For one, just because you don’t like doing something, does not mean you could readily outsource it. Before going into an outsourcing spree, take the time to take a close look at your core business. What are your core competencies and capabilities? What do you value the most in your business? You should be able to focus your resources on being the best at your industry in these key factors.

If your business focuses on product design, you should avoid outsourcing anything that is related to your design activities.

The best types of tasks for outsourcing generally fall into the following categories:

Executive expertise

Hiring employees for executive-level positions can be very expensive. Fortunately, you can hire independent contractors for this. Instead of maintaining enormous monthly salary payments for a CFO, you can have a contractor with a CFO level of expertise to periodically provide financial analysis for your business, ensuring your bookkeeper is handling your books the right way.

Repetitive tasks

Routinary tasks like keeping track of inventory, completing data entry, and recording accounts payable belong to this category.

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Specialized knowledge

A good example of this category is IT support. You can find an outsourced provider with a skill set that will match your specific needs. This option is much more affordable than hiring an in-house IT team.

The right contractors

Technology has made it easier to connect with countless contractors. But how do you choose the right outsourcing providers to work with? The best place to start is your own network. You can ask other business owners or your banker, accountant, and lawyer for recommendations. Online networks like Facebook and LinkedIn are also great places to mine for prospective contractors.  

If none of your friends and professional connections could give you a viable recommendation, you can opt to advertise on work-at-home websites or submit requests for proposals to relevant professional trade organizations. Online platforms like Upwork, Freelancer, and Fiverr are also great places to search for contractors who match your needs. Finding the right contractor often requires having access to vital information about prospective providers. The great thing about outsourcing sites is that they let you see how past clients rated the contractors’ work. You also get access to freelancers’ detailed profiles.

You have to be clear about your performance metrics. Do you put more weight on speed than on the quality of work? Are you willing to pay top dollar for first-rate work? Or would you rather prioritize dollar savings with work offered at affordable rates? Many businesses fail to realize that outsourcing providers vary widely and end up choosing the wrong ones. Having a clear and open conversation with prospective contractors will help you avoid this.

The right arrangement

Your work does not end with finding the right provider. You also need to have a well-defined arrangement. Be willing to devote time to securing a specific contract outlining the type of performance you expect. Add incentives that will motivate your contractor to focus on delivering what is important to you and not merely work on their own preferred way of doing business.

Make sure you are effectively communicating your expectations. Never assume that your offshore employees are thinking what you are thinking. Effective managers take responsibility for failed delivery, blaming themselves for their problematic instructions. Also, you should understand that there may be a learning curve on the part of your offshore contractor. Know that the provider will eventually get the hang of it and that you will earn the freedom to be able to focus on your core business. Moreover, you should realize that your ultimate responsibility is to step back and leave your contractors to do their job. You should be willing to relinquish control. Micromanaging your offshore employees will have you losing the whole point of outsourcing, which is to save time and management attention.

If you are the type who likes to do everything yourself, the whole process may be easier if you delegate the management of your outsourcing relationships. Oftentimes, it all boils down to having the proper mindset.

You must realize that a hands-free approach to low-level operations is the biggest investment you can make for long-term business success. And this right here is the very essence of outsourcing.

The right arrangement
The right arrangement

Finding the right outsourcing company to work with

Now that you have a clear understanding of the things you need to consider before deciding to outsource, here’s what you need to know in choosing the right outsourcing provider: 

Industry expertise

Expertise should always be one of your top criteria in choosing your outsourcing partner. Consider evaluating your choices of outsourcing companies according to the following factors: 

Market reputation

While outsourcing enables you to save on costs, it shouldn’t compromise the quality of work you are aiming for. More so, you shouldn’t be working with an outsourcing provider that always misses deadlines or has poor quality work. 

This is why it is also important to check your outsourcing partner’s market reputation. You can do this by looking into their client reviews and testimonials.

Another thing to consider is to check out their previous works and projects to gauge their skills, work outcomes, and capabilities. 

Costs

Other outsourcers tend to overlook the costs of outsourcing. Before you even start looking for an outsourcing vendor, note that you should have already determined a specific budget. As for your chosen outsourcing company, remember that costs should be discussed upfront to avoid hidden costs. 

Take these considerations to heart, and embrace the world of benefits outsourcing offers.

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