Any business owner or manager considering outsourcing knows the risks that can be involved. Your business’ future can quickly go awry if you put it in the hands of strangers.
It might seem risky to hire staff you may never meet face-to-face, but online outsourcing has never been more appealing, especially once you learn what to avoid.
You should resist the urge to hire the first vendor or worker you contact. Selecting the best vendor or worker will take time.
Before starting a business relationship, many factors need to be considered. Obviously, a quality product and great price will factor into your decision, but they aren’t the only factors. Has the provider consistently improved during its time in business? Do they have a good reputation in their field? Experience, location, flexibility, tax laws, and language or cultural barriers should all be considered.
Take the time to compare their strengths with those of other providers, even if they end up being the right choice. Shop around on outsourcing sites as well. Select a company that specializes in exactly what you need – you want their strengths to match yours.
Is there anything you can do to make sure everything runs smoothly? Here are 13 best practices that will help you avoid outsourcing mistakes and shield your business from the most common pitfalls.
1. Choosing the right activities to outsource
Outsourcing is a huge step, and choosing which activities to outsource is crucial. Make sure your company does not lose its competitive advantage. Maintain control over aspects of your business that make it unique. Do not outsource an area where you are already a leader in price or service levels. For your company to be effective, it’s essential to have a goodgrasp on its most valued elements without changing them.
Outsourcing isn’t always the answer to increased demand. Consider outsourcing some more work to freelance agents if you already do so. You may have extra staff or time to complete a new project in some part of your business. Having someone you know who performs well makes sense, and it will save you time training new hires.
Do not outsource any areas of your business that will directly affect your customers. It’s a risky venture that small businesses or companies in transition cannot afford, but some companies do well by hiring vendors for customer service or sales.
An outsourcing decision is a natural one if the demand in a part of your business outgrows your resources or staff. Is one department complaining that they don’t have time to keep up with all the work? Perhaps you stay up all night working on web design when you should be sleeping so you can make smart decisions the next day. Outsourcing this aspect of your business can reduce stress and help you meet customer demands.
2. Take control of your website
You probably already have an online presence if you’re considering outsourcing. You should make sure people can always find you on your website, which is the beginning and end of your online presence.
One of the most potentially disastrous mistakes is letting your domain be controlled by a supplier. Your site could be taken down by a programmer, designer, or even the software running the site when someone else owns (or registers) your domain name. If you want to be sure you’re the owner of the domain, you should use a service such as www.whois.net, and make sure you have registrar control – find out who currently has access to the registrar and make sure your name is listed. You should never give a programmer access to your registry. You can coordinate even the most complex of changes through registry support, or by coordinating a team viewer session with the programmer.
3. Make sure all outsourcing costs are taken into account
Although companies often outsource to save money, actual and projected savings rarely match. Plan to save about three quarters of your projected amount in the first few months of a partnership, due to adjustment, time loss, and other factors.
It may be difficult to imagine the costs associated with beginning an outsourcing relationship at first. When choosing the right vendor, for instance, you may lose time and encounter fees from networking websites. In some cases, negotiating and drafting a contract can incur legal fees, and continuing the relationship will require time and travel.
4. Vet contractors carefully
Outsourcing usually means monitoring the area from a distance, so your only chance to get to know a potential employee or contractor is during the interview process. Spend enough time with a prospect to get a feel for their personality.
Use prior experience to ask questions – suggest a situation and ask how they handled it before. Watch out for red flags like a negative attitude, disregard for rules or deadlines, or aversion to feedback.
If you are hiring a contractor on a website, you may be able to read other users’ feedback or reviews. When weighing one contractor against another, pay close attention to these factors. It’s probably worth it to pay a bit more for a member with substantial positive feedback than one with no or negative feedback.
Other times, your friends or other business people provide the best reviews. Ask them if they’ve worked with any companies in the area you need. It is possible that they will have tried-and-true suggestions that will make the whole process easier.
5. Put everything in writing
You won’t have much face-to-face contact with your employees when you outsource. It can be difficult to communicate clearly in this situation. It’s a good idea to conduct meetings by telephone to bridge the gap created by long-distance working, but it’s not the most efficient method for passing on information. There’s no way to know if the person you’re talking with is in a calm or distracting area due to technical difficulties.
Whether it’s a memo or an e-mail, written communication leaves a clear record behind. Any information you want your team to remember or refer back to should be communicated in writing. While face-to-face interactions are excellent for building relationships, feedback, guidelines, procedure manuals, and expectations should always be documented.
6. Don’t accept low bids
Despite the temptation to save money, as the adage goes, you get what you pay for. The pay a worker requires is often determined by their education, experience, and quality of work.
Avoid splurging, but also avoid skimping too much – you may regret it later.
7. Ensure transparency
Due to the fact that outsourced work is, by definition, done out of your sight, it is important to ensure transparency. You should meet periodically – once a week, once a month, or whatever works for your partnership – to discuss key elements of your business. Whether it’s an in-person meeting or a video chat, this “face time” will help avoid delays, setbacks, and misunderstandings. Send a memo afterward summarizing the main points of the discussion.
8. Don’t rush
The transition process should also not be rushed, along with choosing a vendor or contractor. The partnership will be more successful if you give the contractor some control and assign the rest based on their performance. Prior to entrusting them with a larger portion of your business, you will want to ensure all is well.
9. Keeping control over outsourced components
Maintaining contact with the parts of your business you’re outsourcing is crucial. Having staff who are solely responsible for overseeing the relationship is the best way to do this. Managers should be skilled in understanding your corporate vision and monitoring the outsourced activity to ensure it aligns with it.
10. Clearly define your objectives
Keep communication lines open, especially when it comes to your goals and expectations, even if you want your team to work independently. For outsourcing to be successful, you need to communicate clearly what you need and describe your vendor’s or employee’s role. Explain the project’s metrics, quality expectations, scope, and deadlines in detail.
Develop a scale to measure the importance of each component of the project. Your own personnel may be able to play the role of mystery shoppers in some situations. Ensure that every aspect of quality monitoring is clearly defined and can be tracked in a consistent manner.
You should pass on feedback directly to your team regardless of whether they are meeting or falling short of their goals. If you focus on the positive as well as the negative, they’ll appreciate your direction. Please be as specific as possible – receiving a failing report is useless, but getting suggestions for improving is useful.
11. Maintaining current personnel with care
When employees learn that your company plans to outsource, they are on edge. They may also feel hurt or offended in addition to wondering if they will be affected. Employees may perceive your decision as a reflection of their abilities. Once decisions have been made, it is best to be upfront with all employees and partners. By taking this step, you will put your employees at ease and eliminate fear and rumors in areas that are not affected.
During transitions, your staff may begin working for your new partner, in whole or in part. Make sure you facilitate the transition, communicating with the employee so they understand what to expect, and maintaining their loyalty. You should also identify key employees in areas that will be outsourced and recruit them to other departments during this period.
You can facilitate a smooth transition even if outsourcing vendors replace your personnel. Respect your employees and let them know they are valued. There are times when employees can transfer to other areas of the company. If not, provide employees with training that will give them an edge in the job market.
Staff should never be asked to train those who will replace them. It’s in poor taste and will not result in proper training. A severance package can encourage employees to stay on until a cutoff date if you want them to continue working until then. There may be a lump sum payment or several payments depending on the number of years of service and salary.
12. Writing contracts well
In particular, this is crucial when dealing with vendors who provide services. You have two ways in which your contract affects the dynamics of your partnership. From the beginning of the relationship, it establishes expectations and serves as a reference document.
Payment, creative and other rights, expectations and roles should be outlined in a contract, as well as an exit strategy. Any contract you sign should be reviewed by a lawyer.
The contract should provide you with the option to terminate the agreement if the vendor fails to meet your quality expectations. If this isn’t possible, at least set a date when the contract will be up for renewal so you can decide whether to continue.
13. Remember the end goal
Outsourcing partnerships must eventually come to an end, and hopefully on mutually agreeable terms. In the event that demand increases drastically or a vendor goes out of business, however, it’s best to be prepared.
Make a plan that you can implement tomorrow if necessary. Would other parts of your business be able to handle the workload? Have you interviewed and are comfortable with a similar provider? Even if you hope that a transition will occur when you have time to prepare, it is best to prepare just in case.
You can grow your company in key areas when you’re well prepared to outsource. You can take advantage of your strengths and find ways to work more efficiently. However, mistakes can also be fatal at this time. When you avoid the pitfalls on this list, you can focus on increasing productivity, quality, and efficiency – and isn’t that what we’re all after?
Let us help you find top talents in IT, technical support, digital marketing, and cloud services so you can leverage all the benefits of outsourcing in the new normal. Request a FREE copy of the e-book on Third Wave Outsourcing .