5 Rules You Must Know Before Outsourcing

Outsourcing can cut project costs and increase productivity, but there’s a lot more to it than just that.
Co-founder, KISSmetrics
September 06, 2011

More and more businesses are discovering the benefits of outsourcing. This includes cutting project costs and increasing productivity, but there’s a lot more to it than just that. When you outsource, you save a large amount of both time and financial resources that typically go into managing employees and dealing with the legal and tax issues involved. Tim Ferris, author of The 4-Hour Work Week has raised awareness of this practice even at the solo-entrepreneur level. However, before you jump in and give your website login codes to someone in the Philippines, here are some good rules to follow.

1. Cheaper isn’t always better

I have had some wonderful outsourcing stories where I’ve paid as low as one dollar an hour for tasks to be completed. (It’s a great “brag stat” to share at the cocktail table.) However, a lot of the time, you may not be able to find someone who can professionally work on your projects for an insanely low sum. When I have something crucial I need to get done, I look at all options and am willing to pay a little more.  It’s still far more inexpensive than an in-house employee or a local freelancer.

2. Overseas isn’t always better

There are plenty of projects where knowledge of the English language or American culture is not a factor. PHP work, Web design and even bookkeeping can be outsourced to a variety of countries.

However, when the project involves writing and editing, then it pays to be a lot more vigilant. For content writing, in particular, you are better off hiring someone domestically. That same company in Malaysia that you hire for coding might offer SEO articles, but you are very likely to not get something quality back. Even if everything is grammatically correct, the articles are more likely to be below the standards of what you want your website or publication to say. Be willing to spend a bit more when you are creating communications for your brand.

3. References are helpful but complicated

This is one of the most overlooked issues in outsourcing. Whenever possible, you should work with someone who has completed projects with people you know and trust. However, this is by no means enough assurance to assume the person or company will be a good fit for you.

For one thing, the quality you get from a contractor can depend heavily on your relationship with them. There was one website company I regularly hired that gave me phenomenal work for years on end, but somehow seemed to drop the ball when referred to other people. They were always upfront and honest with all clients, but their time to complete projects took longer, and they were much harder to reach for discussions.

What I ended up realizing was that I had built a quality relationship with them over years of friendly Skype messages and being an important client when they were low on volume and really depended on my business. I had unknowingly “earned” great service just from being in the right place at the right time. The new clients I had referred to them didn’t have this status, so they didn’t get the same treatment.

Now something like this isn’t very common or even predictable, but it’s reason enough that you should never assume someone is in the clear just because they did a great project for a friend of yours.

4. Get multiple quotes whenever possible

It amazes me how many people hire the first person to contact them to take an assignment. If you’re in a pinch, sometimes you have to take whoever seems good enough at the time, but you should make it a practice to calmly and reasonably choose the ideal contractor. This is why places like Elance, Freelancer.com and oDesk are so great.

You want to compare things like how long a project will take, whether they want to be paid hourly or by a flat fee, and what relevant experience each contractor has. There was one time when I needed an 80 page e-book to be proof-read for simple grammar mistakes. One guy wanted $30 an hour and wanted to spend 12 hours analyzing every nook and cranny of the piece to make it an English Literature masterpiece. A woman who contacted me two days later wanted $15 an hour and said she could have it done in two hours. I picked her, and she did a phenomenal job.

If I had rushed to pick someone right away, I probably would have gotten a deal better than the first guy, but would not have found the gem that I ended up with.

5. Protect your passwords and security

When you outsource website work, especially direct coding, you will have to have a measure of trust with your provider. They will need logins to upload their work, unless you have them send you all HTML and PHP files separately. Assuming you do your due diligence, you’re unlikely to have some vindictive programmer who destroys your site and tries to sabotage your business.

However, you should still stay very cognizant of who has your passwords, logins and any other access to private information. Keep an Excel file of who has this information and change it frequently enough that a programmer you had two years ago will not necessarily have the access codes to your life.

Outsourcing is a skill that you get better at the more you do it. There are also advancements in technology that make outsourcing even easier and more effective. For tasks that are paid hourly, companies like oDesk will have the contractor install software that verifies that the time is being spent on the job instead of surfing the Internet and checking Facebook. Also, through screen captures and video conferencing, it’s a lot easier to check up on assignments and make sure they’re being done correctly. You’ll learn much of this through networking and seeing what other entrepreneurs are doing to improve their outsourcing and project efficiency.

Co-founder, KISSmetrics